The “emergency” debt ceiling legislation, drafted over two weeks of panic to address an “emergency” all parties have known was coming for over two years, passed the Senate this afternoon. The final vote was 74-26.
Here’s a little perspective on the great compromise reached today: it will reduce the rate of spending increase by roughly $21 billion, from spending under the direct control of the current Congress. All other “spending cuts” are “back loaded” into the “out years,” which assumes future Congresses obey all the provisions of the bill passed today.
The federal government spends $10 billion dollars per day, adding $4.5 billion per day to the national debt.
That means the government has borrowed $49.5 billion since the Cut, Cap, and Balance Act was tabled on July 22 – well over twice as much as the “spending cuts” we’re getting right now. The national debt has increased by more than $21 billion since last Friday, when the weekend political struggle over the “compromise” began.
Everything else is promises. We’ll soon have a deficit reduction Super Committee, which the Weekly Standard claims will deliberately exclude anyone who voted “no” in the Senate today. In other words, anyone who sincerely felt the best-case $2.4 trillion in “spending cuts” promised over the next ten years – mostly coming between 2016 and 2021, thanks to the “back loading” – was too small to make a real difference, and voted based on their convictions, will be barred from the Super Committee.
At no point during the next ten years will spending be “cut” at all. The national debt will increase by more than $10 trillion dollars, depending on economic growth, or its absence.
Meanwhile, part of the deficit reduction anticipated by the budget compromise assumes a massive tax increase in 2013, when the Bush tax cuts expire. The Congressional Budget Office would score the extension of these tax cuts as increasing the debt by $5 trillion, which is more than double the deficit reduction promised by this compromise deal. In other words, the deal is entirely predicated on a tax increase that was already scheduled to occur. Without this tax increase, which will hit every taxpayer, the deficit would increase by $2.6 trillion over 10 years, instead of being reduced by $2.4 trillion.
If every provision of the Budget Control Act of 2011 is strictly obeyed, and the Super Committee comes through with all of its promised deficit reduction, the national debt in 2021 will be $24 trillion, and the government will be borrowing $4 billion per day, instead of $4.5 billion.
That is the historic achievement in fiscal restraint and small government we celebrate today.