In case you hadn’t heard, Armaggedon is tomorrow….
But it is all right because Congress has come together in a rare moment of enlightenment and with Obama’s blessing has arrived at a deal that has Nancy exuberantly smiling (or is that grimacing? Hard to tell)…and Harry nearly wetting himself in glee.
For his part, Boehner is trying to stay serious and express the deep concerns for fiscal responsibility that he has tried to convey since day 1 of this so-called crisis.
Obama is now in the White House gleefully patting himself on the back for a job well done.
As for us, the people, well…we have to live with whatever deal is struck behind closed doors.
Am I relieved that a deal looks to have been done, and Armageddon will be deferred to another day?
Nope…I am furious.
I am not exactly surprised by this outcome…a blind man could have seen this one coming.
So…let’s take a look at what has been determined is a 98% win for conservatives:-
1. The debt limit will be increased by $1 trillion immediately (and a further $1.5 trillion by December.)
Ok, so the immediate risk of default is averted….wait…default? There was never a risk of default. The risk was to programs and government spending on pet projects, or the government having to shut down for a while…there was NEVER a risk of default. That was a fear tactic generated by the President…no wonder he is so gleeful today…his fear tactic won!
So…no default…just a trillion dollars more in debt. By my reckoning, assuming a 2% interest rate, that would be somewhere around an additional $20 billion a year in interest expense. Does not seem to be a lot in the scheme of things, but lets keep that number in mind for a later discussion.
Come December, Obama may be able to increase debt by another $1.5 trillion….generating a further $30 billion in interest costs…total interest burden of around $50 billion annually.
2. The government spending level will reduce by a trillion dollars.
That sounds good if it all happened in the current fiscal year it would represent a good start to the debt and spending challenges facing this country.
A good start but not enough!
On closer examination, the spending cuts are to be spread out over ten years…with the majority of the cuts in the out years. Some estimates have the cuts for the current fiscal year to be as low as $7 billion. Why is this number so important….because the interest costs on the increased debt for this year will be a minimum of $20 billion. Therefore the net saving under this plan, this year is an additional spending requirement of $13 billion.
This is the fuzzy math that Washington
But that is not the worst part. This so called spending cut is not based on current spending levels but on already expected future spending levels. Here is what I mean. The 2011 budget is about $3.65 trillion with a deficit of $1.65 trillion.
The 2012 spending is already expected to be 8% higher, or $292 billion. Government income (taxes) are forecast to increase at the growth rate of 4%. 2011 government income was budgeted at $2 trillion, so for 2012 they expect a further $80 billion. SO the “gap” between increased revenue and increased spending is $210 billion. Deduct “planned” spending cuts of $100 billion, and the government has to borrow at least $1.77 trillion to stay solvent in 2012.
In 2013 the numbers get even bigger. And this is assuming 4% growth economically…not the 1.3% (inflated) numbers we are achieving today. I have said it before and I will say it again…numbers have meanings, just like words, but they are easy to manipulate to hide the truth.
I saw a report today that actually said the proposed cuts equal 7% of current spending. Well, that may be true…but they do not represent 7% of the spending over the periods that the cuts are mad. Much closer to about one half of one percent. This is the type of journalistic dishonesty we see every day…and we must be cautious not to buy the BS!!
3. No tax increases.
Wow! That would be a good victory….if it were true.
I have a couple of things to say about this.
a) no tax increases assumes that the tax cuts previously known as the Bush tax cuts (but now should be more appropriately known as the Obama tax cuts) will expire in 2013 and will not be extended. Since Norquist and others have said that the expiration of these cuts does not amount to a tax increase, Obama, Reid, Pelosi and co have tricked Boehner and McConnell into believing no tax increases will occur. BS. Again…to my way of thinking the removal of a tax cut is akin to the imposition of a higher tax rate…it is a tax increase. No amount of spin or trickery or lying changes that fact.
b) the “committee” that is about to be appointed to look at the “crisis” and determine further spending cuts to allow further increase in the debt limit, has pretty much NO rules about what it considers. That “open book” could certainly include tax increases as a trade-off to other reductions as Obama has wanted all along.
Now the Committee will be appointed by both majority and minority leaders of both parties….and does not reflect the current makeup of congress. The fact that republicans make up 59% of the House should have been reflected in republicans having more reps on the council. Likewise, democrats should have more reps from the Senate. The total number would be the same but the makeup would reflect the political makeup of congress. But no…we have to have equal numbers on this very powerful committee.
This is not lost on Nancy and Harry. They see how they can move forward with tax increases through this committee…as can I.
4. IF the super-committee is unable to come up with a proposal for reduced spending as required, or the up and down vote does not pass, a penalty is triggered.
The penalty is supposed to be harsh to ensure that the Committee does its job. Well, the penalty has been written to be that the debt limit will be increased with a corresponding automatic cut in spending on….defense and Medicare!
No wonder Harry and Nacny and Obama are so happy.
The automatic spending cuts are only in the areas where they want to cut anyway.
4. There is a requirement that a balanced budget amendment be voted on by both houses of congress. There is no requirement that it be passed!
So…we have a deal struck behind closed doors that does the following:-
1. allows Obama to borrow more
2. increases spending in the next 12 months by more than the spending cuts will save by virtue of the interest costs on the borrowed money
3. does nothing to address long term spending….in fact allows the spending in every future year to increase at a rate faster than the forecast rate of economic growth
4. assumes the Bush tax cuts expire and are not renewed but is hailed as having no tax increases
5. creates yet another Government committee to come up with additional cuts
6. automatically gives Obama another $1.5 trillion borrowing capacity even if the committee fails to get suggestions agreed by congress
7. penalizes the defence budget and Medicare if the committee fails
8. allows for actual future tax increases
9. does not attempt to balance future budgets
10. gives Obama the ability to ignore debt while he is campaigning for 2012
…and Boehner and McConnell think this is a good deal?
I tell you…this world is totally upside down.
The only hope left is that there are enough sane members of congress to vote against this piece of crap.
As of the writing of this post, no voting had taken place. Harry would not declare victory but indicated he expected to be able to. Boehner was still working the caucus.
This is the worst nightmare I could imagine.
I am sick of the lily-livered pathetic republicans who do not have the balls to make a stand. I am sick of the lies and the spin. I am sick of the conservative leadership bowing before Obama and being complicit in spreading his lies.
Every so called conservative who votes for this travesty of a bill should be removed from office tat the first opportunity.
Do not forget.
It’s time.
The war is just beginning and we are on the front lines. Be strong and fight wherever these idiots try to lie to you.
…..it’s time.
….devereaux
Thank you Devereaux.
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