Assuming no hiccups in the House -- and that might be a big assumption -- we’ve got a deal. It includes $1 trillion in cuts now, $1.5 trillion (or more) in deficit reduction later, and a vote on a balanced budget amendment. It raises the debt ceiling by $900 billion immediately, and either $1.5 trillion (if the second deficit reduction package or the balanced budget amendment passes) or $1.2 trillion (if neither pass) later. Either way, the Treasury should have plenty of borrowing authority to get us to 2013.
Behind the deal is a creative way out of the impasse that’s held up the negotiations: how do you get “balanced approach” if Republicans refused to consider revenues? The solution that both sides seem to have settled on is to substitute defense cuts where taxes would otherwise have gone.In the initial $900 billion in cuts, almost half will come from “security spending” (which includes defense, homeland security, veteran’s benefits, the State Department, etc). Defense is the big money there, and, according to the White House’s fact sheet, it will take a full $350 billion in cuts on its own. But the real hit comes in stage two: if the second round of deficit reduction isn’t signed into law, the “trigger” that will make automatic spending cuts absolutely savages defense spending.
Let’s stop there and talk about the trigger, as it’s arguably the most important part of the deal. In his remarks on Friday, President Obama said he would support a trigger if it was done in “a smart and balanced way.” The implication was that it had to include tax increases as well as spending cuts, as a trigger with just spending cuts wouldn’t force Republicans to negotiate in good faith. The trigger in this deal does not include tax increases.
much more at link
http://www.washingtonpost.com/blogs/ezra-klein/post/a-deal-that-found-the-lowest-common-denominator/2011/07/11/gIQAde9TmI_blog.html
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
