James Pethokoukis

Politics and policy from inside Washington

Why a debt ceiling deal is (probably) going to get done

July 25, 2011

If you believe in a) free enterprise and b) fiscal solvency, would the emerging Harry Reid proposal to raise  the debt ceiling and cut debt be so terrible an outcome? First some general deets:

House Speaker John A. Boehner, Ohio Republican, pitched his colleagues on a plan to raise the borrowing limit by about $1 trillion and match that with similar sized spending cuts — enough to last through the rest of the year, and leaving for later the heavy lifting on taxes and bigger spending items.

Meanwhile, Senate Majority Leader Harry Reid said he is working on a plan to raise the debt limit by $2.7 trillion, coupled with an equal reduction in projected future spending. In a concession to Republicans, he said that plan would not include tax increases, but that the new debt level would last through the 2012 elections.

On the surface at least, this would seem to meet the baseline demands that Boehner and Majority Leader Eric Cantor expressed in their conference call with House GOP members on Sunday. Here is Cantor:

The only way to overcome [Obama] is to remain united and insist that every dollar the debt limit is increased, we have equal or more dollars in spending cuts without ANY tax hikes.

Well, the Reid plan would seemingly cut $2.7 trillion, a few hundred billion more than the debt limit increase. And no new taxes. Republicans will gripe about the quality of those spending cut, of course. And they should. Perhaps $1 trillion — maybe more — would come from no longer assuming perpetual war in Iraq and Afghanistan. But House Rs already passed a budget with the same accounting change, which may make it hard to savage the idea.

In forecasting future spending, CBO feels bound to project the cost of wars forward, even when they already show signs of winding down. Thus, in its March baseline, the CBO assumes $1.67 trillion in war funding through 2021; since the administration forecasts only $630 billion, budget writers can credit themselves with more than $1 trillion in added savings. … House Budget Committee Chairman Paul Ryan of Wisconsin counted the savings to show a larger deficit reduction than he otherwise could have. The whole scoring of the White House “grand bargain” also rested on large war savings.

The rest of the cuts would come from discretionary spending (maybe $1.2 trillion), non-healthcare mandatory spending ($300 billion), and interest savings. And maybe tack on some sort of new debt commission to help keep the credit raters at bay.

All and all, not a bad day’s work for a party that only controls one chamber of Congress and faced a White House that wanted a clean debt limit hike in April. (Though I would like a closer look at those discretionary cuts.)

After that, make the 2012 elections about the size and scope of government — and how to pay for it. Will it happen? Wouldn’t surprise me a bit. And, after all, markets won’t stay calm forever.

Comments

Not bad at all. This looks do-able, so sign it and get on with it. Leave the big philosophical stuff for 2012 – that’ll be the time to kick Mr. Obama’s butt.

Posted by Elektrobahn | Report as abusive
 

James, you should feel smug. Right wingers like like yourself are getting everything they want. I am actually amazed that you are so dishonest that you haven’t come out and said that Obama is the best president for trickle down economics in history. You have to be asking yourself, what can I criticize him on? He is a right wing extremists dream. Unable to take a stand and stick with it, he has done more to move the republicans to the right than any other. They make Carl Rove look like a bleeding heart liberal. He will go down as the president that did more to destroy the middle class then any in modern history simply by letting a misguided party extort their way into complete power while disenfranchising about 70% of the public. Good job James. You and your cohort should be proud.

Posted by robscheerger | Report as abusive
 

Exactly – this is why Republicans keep playing at brinkmanship and at moving the goalposts… because the reasonable Dems would rather try and get stuff done rather than destroy the country for ideology. Conservatives take it as a mandate for their beliefs, but really it’s capitulation to avert DISASTER since conservative negotiation doesn’t involve compromise. This has been essentially the most depressing series of events (since May 6), not just because the Dems have been forced to fold but because Dem voters will probably be demoralized and Repubs will make a clean sweep of it in 2012 and the country will finally be completely dismantled and handed to the rich.

Posted by CDN_Rebel | Report as abusive
 

You should feel smug, James. Economically challenged people like you are getting everything they want. I am actually amazed that you are so dishonest that you haven’t come out and said that Obama is the best president for trickle-down economics in history. You have to be asking yourself, what can I criticize him on? He is a right wing extremists dream. Unable to take a stand and stick with it, he has done more to move the republicans to the right than even Grover Norquist. Now that they have no supervision, they are like group of out of control children after a piñata breaks open with candy being the American government. He will go down as the president that did more to destroy the middle class then any in modern history simply by letting a misguided and destructive party extort their way into complete power while disenfranchising about 70% of the public. Good job James! You and your cohort should be proud.

Posted by robscheerger | Report as abusive
 

Cantor’s latest comment again demonstrates that his primary focus is political, and that is to defeat Obama. He puts that, the greed of the rich, and the loyalty of the tea partiers above the country’s welfare.

Fellow Americans are risking their lives and physical well-being in places like Iraq and Afghanistan, and Cantor is not even willing to risk his image as foe to Obama for the sake of our country’s economic good. Despicable.

Posted by abouttime | Report as abusive
 

Nope. Dead in the water. This isn’t about getting the job done; it is about creating a smear point for the 2012 campaign. “Obama said “no” to Republican proposals,” is how it would read. The House wants whatever is passed to be a House proposal and it doesn’t really matter what is in it.

Posted by DwDunphy | Report as abusive
 

“Perhaps $1 trillion — maybe more — would come from no longer assuming perpetual war in Iraq and Afghanistan. But House Rs already passed a budget with the same accounting change”

What an impressive lie you have here.

http://budget.house.gov/News/DocumentSin gle.aspx?DocumentID=253640

Here’s Ryan debunking it.

http://budget.house.gov/UploadedFiles/Su mmaryTables.pdf

Chart S-4 (the 2nd one, not the CBO one) here shows how they got the the 6.2 trillion number; which has what for the GWOT in savings?
0 + 0 + 0 + 0 + 0 + 0 + 0 + 0 + 0 + 0 + 0 = what total savings for ending those wars?

Is adding zero to itself 11 times how you count to a trillion?

Would you care to try again with the real numbers? Or would you prefere just to let your blatant lie stand?

Posted by ertdfg | Report as abusive
 

Democrats are the party of freeloaders. Freeloaders produce nothing much of value to society, while taking, taking, taking and demanding more. A society cannot long exist where 50% of citizens refuse to shoulder their own burden. Time to grow up, freeloading Dems. Time to put your money where your mouth is and accept responsibility for yourselves.

Republicans are seen as the party of business. Business produces jobs, taxes and economic vitality. Society cannot long exist without these. Time to stop seeing business as the enemy. Time to pull together and accept that those who take the biggest risks reap the biggest rewards. It’s only fair. If you have a problem with that, start a business.

So, everybody, quit your whining and accept your own complicity in our country’s current condition. Do as JFK exhorted in his inaugural address: “Ask not what your country can do for you. Ask what you can do for your country.”

Posted by Royalsan | Report as abusive
 

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