As of noon today, the long battle over the debt ceiling is at an end (at least for now). The bill passed the House of Representatives <a href="http://clerk.house.gov/evs/2011/roll690.xml">by a 269-161 margin yesterday</a>, and cleared the Senate by a<a href="http://www.cnn.com/video/#/video/politics/2011/08/02/sot.senate.debt.vote.senate?iref=allsearch"> 74-26</a> vote earlier today. From what you've probably heard from the avalanche of news about this deal, it won't include tax increases, will raise the debt ceiling by roughly $2.4 trillion (ensuring we won't deal with it until after the 2012 elections), and will cut that amount in taxes. At face value, you'd think this is a good deal?
Ah, but that is where they get you with the details. The cuts will be spread out over ten years, which theoretically would mean that we'd be shaving $240 billion off the deficit each year, all things being equal. However, not even that will occur, because when <a href="http://www.zerohedge.com/news/ron-paul-exposes-deficit-plan-lies-cuts-are-illusory-not-current-amounts-spent-projected-spendi">Washington "cuts" spending, they really mean that they're going to slow the rate of growth in spending projected by the CBO</a>, and calling the difference between the baseline and the spending pattern a "cut". So in other words, rather than cut spending, spending will increase, just more slowly.
As expected, each party's leaders are putting their own spin on the deal. House Speaker Boehner (R-Ohio) is trying to tell his caucus that the bill is a victory for Republicans because it doesn't include tax increases, while House Minority Leader Nancy Pelosi (D-California) tells her caucus that it could've been worse, but it gets the job done.
In reality, nobody really won, because there isn't anything in the compromise that is a cause for celebration. The debt ceiling is still being raised, so we've found more road to kick the can down, which means more room for spending. Also, a "Super Congress" was formed, which, as I mentioned in a post from last week, represents nothing more than legislators handing over their power to tax-and-spend to a small group of their peers, which could yield no actual solutions to the problem of debt and deficit. Yes, they're being forced to act because of a spending-cut heavy "trigger" that would axe huge portions of entitlement and defense spending, which seems like the best way to actually cut spending right now rather than whatever smoke-and-mirrors tactics this deal is promoting.
<a href="http://silverunderground.com/2011/08/debt-deal-passes-so-now-what/">Originally posted at www.silverunderground.com</a>
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