Debt Ceiling: Agreement Reached, Says Obama
“The leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default,” announced President Obama Sunday night.
The agreement would cut $1 trillion from a 10-year budget, and would raise the debt ceiling enough to get past the 2012 elections. There would be a second round of deficit reduction that would come from a bipartisan committee of 12 senators and congresspersons.
This “super-committee” would design a bill to reduce deficits by at least $1.5 trillion over 10 years. These deficit reductions would likely include entitlement reform and tax reform. Congress would vote on the super-committee bill on a set date sometime before Thanksgiving 2012. If Congress fails to pass the super-committee bill, automatic spending cuts, or “triggers,” would go into effect.
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The main sticking point in negotiations on Sunday was the nature of the triggers. Republicans do not like the fact that the triggers might include deep cuts in military spending. Democrats do not want triggers that would cut Medicare. Since the purpose of the triggers are to keep both sides at the bargaining table, however, triggers that are only meaningful to Democrats or only meaningful to Republicans would not work.
The debt limit debate, played out in the media and on the floors of Congress over the weekend, clarified for the public the main differences between Republicans and Democrats. Republicans want an agreement that will keep taxes low, reduce the size of government and restrain the growth of entitlements. Democrats want to protect entitlements and raise taxes, especially on the wealthy, to do so.
From the Democratic side, the Congressional Progressive Caucus and the Congressional Black Caucus voiced displeasure at the agreement.
Rep. Raul Grijalva (D-Ariz.), of the Congressional Progressive Caucus, issued a statement saying, “the deal trades peoples' livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it...today we, and everyone have worked to speak for and fight for, were thrown under the bus .... This deal is a cure as bad as the disease. I reject it, and the American people reject it. The only thing left to do now is repair the damage as soon as possible.”
Rep. Emanuel Cleaver (D-Mo.), chairman of the Congressional Black Caucus, called the deal “a sugar-coated Satan sandwich.”
Stephanie Taylor from the liberal Progressive Change Campaign Committee said, “seeing a Democratic president take taxing the rich off the table and instead push a deal that will lead to Social Security, Medicare, and Medicaid benefit cuts is like entering a bizarre parallel universe.”
After the shooting of Gabrielle Giffords, many on the left suggested that violent gun metaphors should be avoided in political speech. In the heat of the debate that lesson was forgotten by MSNBC political analyst Jonathan Alter when he said, “It's like someone went on a diet, they failed, so what do they do? They put a gun to their head and blow their brains out. That's the situation we have. We now have to wrestle that gun away from the Republicans who decided they want to blow up the world economy in order to achieve their very narrow objectives. It's a hostage situation.”
Liberal columnist and Princeton economist Paul Krugman said on This Week, “From the perspective of a rational person, in other words a progressive, on this stuff, we shouldn't be even talking about spending cuts at all now .... basically the Republicans said we'll blow up the world economy unless you give us exactly what we want and the president said, 'OK'. That's what happened.”
Conservative columnist George Will responded to Krugman, saying, “We're a third of the way through a rough decade, but we're a third of the way after TARP, a stimulus, Cash for Clunkers, Dollars for Dishwashers, an entire range of stimulus, the Keynesian approach, which, by its own evidence simply hasn't worked.”
Krugman reminded Will that he had said all along that the stimulus was not big enough and that is why it did not work. Will responded, “It would be good to go to the electorate and have a Krugman election this time saying, 'resolved, the government is too frugal,’ let's vote.”
Speaker of the House John Boehner (R-Ohio) held a conference call with House Republicans Sunday night. “Now listen, this isn’t the greatest deal in the world. But it shows how much we’ve changed the terms of the debate in this town” Boehner said as he asked them to support the agreement, according to John McCormack of the Weekly Standard.
“There is nothing in this framework that violates our principles. It’s all spending cuts. The White House bid to raise taxes has been shut down. And as I vowed back in May – when everyone thought I was crazy for saying it – every dollar of debt limit increase will be matched by more than a dollar of spending cuts. And in doing this, we’ve stopping a job-killing national default that none of us wanted,” Boehner said.
Obama reminded everyone in his statement that the debt ceiling has not been raised yet. Congress must vote on the proposal for it to become law.
“We're not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way, and it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing,” Obama said.
