Here we go.
ABC News is reporting tonight that Republicans have worked out a deal with the White House on a tentative debt ceiling agreement. The bullet points are:
- Debt ceiling increase of up to $2.8 trillion
- Spending cuts of roughly $1 trillion
- Special committee to recommend cuts of $1.8 trillion (or whatever it takes to add up to the total of the debt ceiling increase)
- Vote on the Balanced Budget Amendment
- Committee must make recommendations before Thanksgiving recess
- If Congress does not approve those cuts by late December, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare.
A few thoughts. Mind you, I’m assuming that a few elements that have been in prior agreements will show up here. I’m also assuming that things won’t change, which is a very large assumption. If the situation changes, Michelle Malkin will have it as quickly as anyone, so check there.
1) No tax increases. Then again, tax increases came off the table several trial balloon agreements ago and only the President has seriously mentioned them in the past week. Then again, it’s possible that we could see tax increases in the committee recommendations. That devil still lies in the details.
2) The “cuts” at least equal the amount of the debt ceiling increase. One of the big problems with the first version of the Boehner plan is that his math was horrible and the cuts didn’t equal the ceiling rise.
3) It will pass the Senate. Probably. The President will sign it. Then again, I doubted that he would have vetoed any agreement that hit his desk based on his stellar record of keeping promises and taking hard decisions.
1) These “cuts” are probably not real cuts. They are imaginary cuts to an imaginary and assumed yearly increase of the size of government called the baseline. Thanks to the way Congress has chosen to do business for a while now, increases are a built-in feature of the budget system and if a budget isn’t increases as much as projected, it’s scored as a “cut”. It’s bogus but it’s the way the system works and the GOP hasn’t really tried to change it yet. There’s a caveat. If the second tranch of 180 billion recommended by the committee goes against the budget and is also spread out over ten years, then those “cuts” will be cuts.
2) Assuming this deal is spread over 10 years like the other plans have been, we’re looking at a picayune amount of “cuts”. The average rate of increase from 2001-2011 was 6.1 percent. Based on the 2011 budget figure, a yearly “cut” of 100 billion a year comes to a bit less than 3 percent. The committee cuts would be critical. If they follow my caveat above, then they’d come out of real spending. The cuts wouldn’t be big — perhaps 2 percent at most — but they’d be a beginning. Still, the early plans Boehner offered were less than clear about how that second round of cuts would arrive.
3) Though this agreement reportedly contains a provision to allow for a vote for a Balanced Budget Amendment, it doesn’t require passage. That step back from the Boehner 3.0 deal, which did have a “passage provision”. I’m not quite sure why Congressional Republicans aren’t pushing harder for something over 70 percent of the American people, if this Gallup poll is to be believed. Rep. Cathy McMorris Rodgers pushed a video from the GOP Labs to YouTube that is excellent on the BBA, but I didn’t see where others in the caucus followed up on it. I note again, though, this is an early report and the situation could change. In fact, it most likely will, but we’ll have to see.
CORRECTION: I changed the third “bad” bullet point to reflect that the potential agreement does allow a vote for the BBA. I hate working quickly, but at least it’s right now.
UPDATE: Stacy McCain and Ed Morrissey are all over the early reports as well. They’ll be excellent sources of late-breaking news, so make sure you check their sites as well. Check Ed’s post, in particular, for a slightly different variant on the agreement that moves the BBA much closer to reality.
Category: The Economy and Your Money