A deal only a politician could love

by Norm Leahy

The news readers on the financial networks this morning were almost giddy. The political class has reached a debt ceiling deal! The futures are up! Now we can get back to the serious business of letting fund managers talk their books!

This mindless cheerleading will go on for most of the day, or at least until the closing bell. But for those of us who look upon almost anything that oozes out of DC with contempt, there are a few hard facts to know about this “deal.” Fortunately, Cato’s Chris Edwards, again, does the dirty but essential work:

Spending isn’t being cut at all. The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.

No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.

The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.

There are those, including many folks I respect, who will call even such lilliputian cuts as these a victory. And they have something of a point: for the last decade, the political class has cut nothing, so even the most modest of cuts, even if they are chained to the ever-rising baseline budget, are at least rhetorically significant. And even more, these pin-pricks have been achieved despite a Democrat-controlled Senate and a Democratic President, both of which were counting on, and campaigning for, higher taxes as part of any deal.

Fair enough.

But there’s an old, colorful saying: “Don’t piss on my boots and tell me it’s raining.” This deal is not a solution. Entitlements, war spending, even grants for cowboy poets…they will continue unabated. And far sooner than almost anyone is willing to admit, the bills will come due and the shambling fiscal wreck that is the United States will find itself unable to pay.

Over the weekend on “The Score” radio show, Jim Bacon and I discussed the debt ceiling follies and what might really be required to set the nation on a sound fiscal course. You can listen to that wonky goodness here.

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3 responses to “A deal only a politician could love”

  1. Great job, Norm. I couldn’t have said it better myself.

  2. Well, except for the Blue Dogs, Democrats have never been..never claimed to be paragons of budget hawk-ology.

    But our friends the Republicans have and continue to claim that they are the “responsible” party.

    But the Republicans basically got hoisted on their own petard because with two deficit commissions AND Obama AND David Stockman saying that cuts-alone could not effectively deal with the problem – the Republicans then staked out the “cuts only” position but alas – not a one of them has had the courage or conviction to put on the table a “cuts-only” budget approach.

    So.. in the end.. they knew they could not provide a cuts-only plan that would EFFECTIVELY rein in spending so basically they made a back room deal with the Dems…to save face.

    The Dems don’t look any worse on the budget than they did before and, in fact, since their plan (with additional revenues) would have walked and talked like one or both of the deficit commissions.. they actually look like they were trying for “more”.

    But youse guys…sooner or later.. you’re gonna recognize just what a bunch of hypocrites the self-proclaimed party of “fiscal conservatism” has turned into.

    Every since Bush II, these guys have lost their fiscal conservative bearings and become a highly divisive, highly fractured party of ideology rather than fiscal responsibility.

    Basically, they’ve bankrupted the country with two wars and Medicare Part D that they “financed” with tax cuts… and now.. they refuse to own what they created and want to blame others…. which is laughable when you realize that the Republican Party – now wants the Democrats to do what they’re not historically noted for – cutting spending – because the Republicans cannot not even manage to put on the table a spending cuts only budget.

  3. How many members of deficit commissions are Washington insiders who are addicted to OPM — other people’s money? Also, we need to impose a minimum tax of $100 on all Americans except for the totally destitute. Too many citizens have no skin in the game and see government as free. I cannot imagine the Founders intending that so many people would not pay any federal taxes whatsoever for the support of the general government.

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