Wow. Striking a tentative deal over the debt limit and government spending sure was fun. Pretty much like having a colonoscopy performed with a Roto-Rooter. But the worst part of this fiasco may still be ahead of us.
As part of the deal — assuming it gets through both the Senate and House — Congress will form a 12-member bipartisan committee — a kind of Super Congress — to hash out further spending cuts (and maybe or maybe not revenue increases) before the end of the year. And if they can’t agree, or the now so-called Regular Congress doesn’t approve, then there are automatic triggers that take a bite out of a whole host of programs from Medicare to defense spending.
Just what we need. Another Inside the Beltway committee — and since at least one Republican member of this Super Congress will surely develop the Jimmy Leg, expect tax increases along with spending cuts. And expect this debate to hang over other big fish in the skillet: the need to create jobs and the fact that the economy is slowing to the point that we might very well see another recession. Ouch.
Maybe that’s the point. Here’s from Ezra Klein in WaPo, “Wonkbook: A Deal that found the lowest common denominator“:
In a presentation to his members, Boehner says (pdf) that the rules governing the committee “effectively [make] it impossible for Joint Committee to increase taxes.” Specifically, he’s arguing that using the Congressional Budget Office’s “current-law baseline” makes tax increases impossible, as that baseline assumes the expiration of the Bush tax cuts, and so, if you touched taxes at all, you’d have to raise taxes by more than $3.6 trillion or the CBO would say you were cutting taxes and increasing the deficit.
Confused? That seems to be the point. Boehner is misleading his members to make them think taxes are impossible under this deal. But make no mistake: The Joint Committee could raise taxes in any number of ways. It could close loopholes and cap tax expenditures. It could impose a value-added tax, or even a tax on carbon. The Congressional Budget Office would score all of this as reducing the deficit under a current-law baseline. The only thing that wouldn’t reduce the deficit is going after part of the Bush tax cuts. That means they’re likely to go untouched in this deal.
That’s actually good news for…people who want to raise taxes. The Bush tax cuts will still be set to expire in 2012, which means that if Democrats get some revenue as part of this deal, they’ll be able to get more revenue if Congress gridlocks over the Bush tax cuts in 2012.
But that’s really a technicality. Boehner is promising that he’ll oppose any deal that includes revenue, and unless he decides to break his promise next year, that means the House is unlikely to pass any deal that includes revenue. So that leaves us with three options: 1) there’s no deal and the trigger goes off, 2) the Democrats agree to $1.5 trillion in further spending cuts alongside zero dollars in tax increases, or 3) Republicans agree to revenues.
The upside of this deal is that “the debt ceiling will cave in and Congress will create a global financial crisis for no reason” is not one of the potential outcomes. So that’s something.
The downside is that we actually haven’t come that far: we’re still pretending that a deal a few months from now will somehow be easier than a deal today, we’re moving to austerity budgeting — note that neither unemployment insurance nor the payroll tax cut are extended — while the economy remains weak, and we’re putting off the decisions about what to cut and how to handle taxes.
And that gets to the truth of this deal, and perhaps of Washington in this age: it’s all about lowest-common denominator lawmaking. There are no taxes. No entitlement cuts. No stimulus. No infrastructure. Less in actual, specific deficit reduction than there was in the Simpson-Bowles, Ryan, or Obama plans, and even than there was in the Biden/Cantor or Obama/Boehner talks. The two sides didn’t concede more in order to get more. They conceded almost nothing in order to get a trigger and a process, not to mention avoid a financial catastrophe.