In the end, the deal to a avert a government shutdown and keep funding going for the rest of the fiscal year amounted to a $38.5 billion cut in appropriations from the 2010 baseline (although WaPo puts it at $37.8 billion, the joint Boehner/Reid announcement used the $38.5 billion number, so that’s what I’m going with). There was a time last December, with the McCaskill-Sessions compromise, promoted by the very conservative Republican ranking member of the Senate Budget Committee, when Republicans agreed to a 2011 budget appropriation $20 billion ABOVE the 2010 baseline. If mixed in with the tax cut deal, that level could have been put in place. Therefore, this deal inked late last night cut $58.5 billion from the level of McCaskill-Sessions. This equals all of the tax advantages that didn’t extend current law, outside of the business expensing provisions, in the December 2010 tax cut deal. The entire stimulus is gone.
Incidentally, John Boehner made an additional point – because the cuts to agency appropriations end up setting a new baseline and magnifying over time, the total impact of cuts in this bill is $500 billion over the next decade.
This comes at a time of 8.8% unemployment, when many economists believe additional fiscal stimulus is needed to prop up a nascent and still-fragile recovery. But Washington has gone into austerity mode. You had a Democratic President last night touting the “largest annual spending cut in our history,” as if that were something of which to be proud. Yet it’s undeniable that this cut sets the country backwards and puts it on bad footing for the additional bigger spending fights ahead. To quote Brian Beutler: “That the focal point of policy on Capitol Hill is on what should be cut — and not when to cut, or whether cutting is even wise — illustrates just how brief the progressive moment lasted after Obama’s election in 2008. It also represents a colossal failure of government.”
Indeed, the boasting about “historic” cuts coming from Democrats, after months of rhetoric where they said these same cuts would eliminate jobs and hurt the economy, was tough to take. I don’t have Mark Zandi’s home phone number, but he said previously that cuts of $61 billion would cost the country 700,000 jobs, based not really on where the cuts went but simple macroeconomic projections. So this $38.5 billion cut will cost what? 400,000 jobs? 500,000? From a self-preservation angle, this is lunacy: [cont’d.]
Right now, the economy is weak. Giving into austerity will weaken it further, or at least delay recovery for longer. And if Obama does not get a recovery, then he will not be a successful president, no matter how hard he works to claim Boehner’s successes as his own. Clinton’s speeches were persuasive because the labor market did a lot of his talking for him. But when unemployment is stuck at eight percent, there’s no such thing as a great communicator.
So now that a six-day stopgap has passed, with the final deal to pass next week, we ask ourselves, what’s in it? Where do the cuts come from? What part of the budget? What programs? And what policy riders are in there?
Let’s go with what we know:
• From the Los Angeles Times: “The stopgap measure would fund government operations through Thursday, using $2.5 billion in unused transportation funds. Those cuts would be counted toward the overall reductions.” OK, so what does “unused transportation funds” mean? Initially, I was told that $1.5 billion of this comes out of high speed rail, perhaps the unused funds that Florida sent back to Washington. But I have not been able to confirm that. At any rate, when President Obama said in his speech that “infrastructure projects will be delayed,” this is part of what he means. That’s $2.5 billion on the sidelines that could have gone into transportation infrastructure and construction, i.e. jobs.
• Also from the LA Times: “Democrats pursued reductions from one-time cuts and accounts with surpluses. In the end, about half the cuts, nearly $18 billion, come from such areas.” This matters for the future, because agency appropriations end up becoming the new baseline, so the cuts magnify over time.
• From the WSJ: “Includes $513 billion for defense – less than Republicans and President Obama wanted but more than the $508 billion provided in 2010.” So defense actually gets a $5 billion increase above the 2010 baseline. This is equal to what was in McCaskill-Sessions in December. Defense didn’t get touched.
• WSJ: “Bans the use of funds for the transfer of prisoners from the Guantanamo Bay detention center in Cuba to the U.S. mainland.” Not that this was in doubt, but this rider continues for the rest of the fiscal year. This is already a Lost Cause, as KSM will get a military commission, and Guantanamo will remain open.
• From TPM: “Republicans have also been promised votes in the Senate on riders to defund Planned Parenthood and health care implementation.” Those votes will fail, and everyone – including Republicans – know it. So that’s not a big deal. In fact, Democrats will be happy to put some Republicans on the record on defunding the quite popular Planned Parenthood.
• From the Christian Science Monitor: “Anti-abortion lawmakers did succeed in winning a provision to ban the use of government funds to pay for abortions in the Washington capital district.” This is a radical step. The District of Columbia will not be able to use even its own tax dollars collected from its constituents to pay for any reproductive choice services. When this says “government funds,” we’re not only talking about federal government funds, we’re talking about DC’s local government funds. Annals of colonialism!
• But that’s not all! From WaPo: “The spending deal agreed to Friday night to avert a government shutdown includes a provision banning the District from spending its own funds to provide abortions to low-income women as well as funding to continue a controversial school voucher program.” Yes, the ridiculous DC voucher program, which Boehner made a personal crusade, got put in at the last minute. These both were Republican programs that Democrats cancelled; now they’re back. And the voucher program will get funding for five years.
• From the Wall Street Journal: “Also in the deal is a provision requiring an annual audit of the new Consumer Financial Protection Bureau, which had been created by last year’s Dodd-Frank financial overhaul law.” Apparently, the GAO and a private company will conduct this annual audit. This might mean a day of spin every year or it might be used as a weapon to undermine CFPB.
What we don’t know is precisely where the rest of the budget cuts will fall, or what other riders will be found in this agreement. We’ll get that information soon.
Note that there’s nothing in here about one looming item: the debt limit. America reaches that sometime in May. That’s next month’s big fight. It’s not logical to hope for a better outcome.