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by Don Azarias
September 3, 2011
Finally, a debt-limit deal has been reached by President Barack Obama and the top leaders of Congress from both parties. The 11th-hour legislation was signed into law by Obama on August 2, 2011. Now, everyone is happy and everything is hunky-dory and it’s time for all of us to rejoice and celebrate, right? If you answered “yes,” you better think again.
The agreement would cut at least $2.4 trillion from federal spending over the next decade, but allowed the country to avoid a first-ever debt default and extended the Treasury’s authority to borrow beyond the 2012 elections. This is made up of about $900 billion in caps on discretionary spending (including military spending), plus another $1.5 trillion of future spending caps to be determined by a bipartisan deficit-reduction committee.
According to the Associated Press (AP), any agreement by the panel would be voted on by both House and Senate. However, if the panel is deadlocked, automatic spending cuts would slash across much of the federal budget. Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare. Summing it all up, the government is expected to spend more than $46 trillion over the next decade, so the reductions are slightly more than 5 percent of this. The first round of cuts will not touch the big entitlement programs like Medicare and Social Security that make up most government spending. The second round of cuts, however, will likely hit Medicare.
This deal will preserve the nation’s stellar triple-A credit rating according to those knuckleheads in the nation’s capital and credit rating agencies. And let’s not forget those Wall Street analysts who said the same thing too. I completely disagree with them. How could they all have gotten this wrong? How, in the world, can the United States have a triple-A credit rating when it is carrying more than $14 trillion debt in its books and having difficulty paying down its debt? Are those experts not aware that the debt of the United States now equals its total gross domestic product (GDP)?
Going back to that special bipartisan committee, which House Speaker John Boehner referred to as “super committee”, it would be established to find up to $1.5 trillion in deficit cuts, probably taken from benefit programs like farm subsidies, Medicare and the Medicaid health care program for the poor and disabled. Come to think of it, I have this question to ask: How effective would this super committee be in doing its job? Will it recommend what programs and expenditures have to be cut only to be ignored by the president?
We can still recall that President Obama, through an executive order, created the bipartisan National Commission on Fiscal Responsibility and Reform (NCFRR) on February, 2010, to address our nation’s fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the federal government. Whatever happened to it? Nothing. Obama never acted on the recommendations of his bipartisan fiscal commission. This is a classic example of a leader who is “all talk, no action.” You don’t have to be a rocket scientist to correctly anticipate what he plans to do on this political deal. And, of course, that’s assuming that he is still the White House occupant at that time.
It’s my own personal opinion that the only way to really reduce the deficits is to make sure that stricter reforms for entitlement programs are instituted and the implementation tax reforms with the complete overhaul of the system in order to close those tax loopholes that benefit most of the wealthy and those large business entities and Wall Street institutions.
Although Speaker Boehner and his Republican allies have been successful in winning spending cuts equaling the amount of the debt increase, the cuts are scheduled to take effect over time and future White House occupants and future Capitol Hill lawmakers, through political machinations, would be able to find ways to go around those spending caps and defeat their original intent. And, once again, those Washington, D.C. political leaders would be able to start spending money that we don’t have to further make the amount of U.S. debt unsustainable the same way it is now. Before we know it, we are back to the same old deal-making process again. We just have to get used to what those knuckleheads in Washington, D.C. do.
The outline of the agreement, itself, is so complicated and even convoluted, that it’s hard for the average American taxpayer, who foots the bill, to understand. And I do believe that that was the real intent of those lawmakers: Make the provisions of the legislation nebulous to confuse the taxpayers.
Make no mistake, however, that the deal seems to tilt to the GOP’s favor especially its Tea Party base which is considered by some to be a pain in the Party’s neck. It’s bad for President Obama, who gave in to repeated threats. He traded spending cuts upfront without getting anything in return in the form of guaranteed new revenue. The Republicans forced Obama to agree to deficit-reduction with no explicit call for tax increases. They managed to block the inclusion of what they described as “job-killing tax hikes. They won votes in both chambers on a balanced budget amendment to the Constitution and built what they regard as acceptable protections of future defense spending. They also eliminated a Democratic bid to count as savings $1 trillion in spending on wars in Afghanistan and Iraq that was unlikely ever to be spent.
In fairness to Obama, he did protect Social Security, Medicaid, children’s health insurance, and veterans benefits and other entitlements from across-the-board cuts if the special committee fails to propose specific budget cuts to Congress. But the president opened the door to Medicare cuts. Even though they are limited to providers, Obama has put Medicare cost savings on the table.
After a long and contemptuous negotiations, Congress finally voted to raise the country’s debt-ceiling, which the president signed, thus averting a catastrophic default by the United States of America. But, in the final analysis, one thing is certain: The size of the federal debts and deficits will definitely be a burden to and make uncertain of our children’s children’s future. At least, by that time, most of us won’t be around anymore; only our poor children.
What gives?