Debt Ceiling Deal: The Devil Is In The DetailsDemocrats are upset that the deal does not include increasing revenues. But that’s not accurate. In fact, it virtually guarantees a revenue increase by the end of 2012. And Boehner knows it.
Here’s how it works: Part of the deficit reduction estimates used to sell this deal to the Republicans count on Congressional Budget Office estimates. Those estimates set a baseline. All reductions have to come from that baseline and if any additional spending is to be made, offsetting cuts must also be enacted.
Here’s where it gets interesting. The CBO baseline already assumes that the Bush Era tax cuts will expire at the end of 2012. The spending levels for 2013 include the additional revenue from those cuts expiring. If Republicans want to extend those tax cuts (which are considered spending), they will have to make cuts to the budget to offset every penny. They won’t have the political control needed to do that before the end of 2012, even if the President loses his office and they take control of the Senate, as the cuts expire in 2012, and a new administration and Congress would not be seated until January 2013.
So, unless Republicans want to try to pass an extension along with offsetting cuts during an election year, those cuts will expire. Senate Majority Leader Harry Reid has already said he will not allow the issue to come to a vote, and the President has vowed he will veto it. So if Republicans want to extend those cuts, they will have to come up with $4T in spending cuts to offset the tax cuts. To make it more difficult still, the deal makes it clear that those cuts must come in a 50/50 ratio between defense and non-defense spending, with Social Security, Medicaid, unemployment insurance, civilian and military retirement off the table. Medicare cuts would only come from the provider side, not the individual.
Now, take that in for a minute. If Republicans want to extend the tax cuts, they will need to cut an equal amount out of spending, with half of that coming from defense spending.
Half. This is in addition to the $350B that are already being cut as part of this deal. To get their tax cuts, Republicans would have to slash another $2T from defense spending. They would have to justify slashing the defense budget for the benefit of the wealthiest Americans. And with all the social programs off the table, where will they find the other $2T? The plain fact is, they can’t. Senate Majority Leader Harry Reid says he won’t let it come to a vote, and the President says he would veto any extension.
...Why does this leave Boehner and Senate Minority Leader Mitch McConnell is a tough spot? Because they must pass $1.3T in cuts before the end of the year to avoid the automatic trigger. They don’t want to be seen as cutting military spending (although that is likely where a lot will come from anyway). And because they insisted that the decrease in spending from the wars in Iraq and Afghanistan not be counted as spending reduction, they’ve removed that ploy from the table as well. If they are unwilling to compromise, they will be facing massive additional cuts to the military. And all while not touching sacred social programs. That’s a hell of a corner to be painted into.
http://www.editedforclarity.com/2011/08/01/debt-ceiling-deal-the-devil-is-in-the-details/#disqus_thread
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