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The CBO report on John Boehner’s debt limit plan has really set back the effort and probably poisoned the entire enterprise among the more conservative members of his caucus. But it did provide some key information.
First of all, take a look at CBO’s summary of the Boehner plan. It would:
Establish caps on discretionary spending through 2021,
Allow for certain amounts of additional spending for “program integrity” initiatives aimed at reducing the amount of improper benefit payments,
Make changes to the Pell Grant and student loan programs,
Establish procedures for Congressional consideration of a balanced budget amendment to the Constitution,
Establish procedures to increase the debt limit by up to $2.5 trillion,
Reinstate and modify certain budget process rules, and
Create a joint Congressional committee to propose further deficit reduction.
There are no specific spending cuts in the entire plan. The cap on discretionary spending does all the work on the deficit reduction side until the joint Congressional committee, or Catfood Commission II, kicks in. In fact, there are two pieces of additional spending in the plan. The “program integrity Initiatives” would spend money to reduce waste, fraud and abuse in disability, SSI, Medicare, Medicaid and the Children’s Health Insurance Program. That’s right, John Boehner believes that it’s worth spending money – about $1 billion – to stop fraud and eventually save money in key programs. I guess that means he’s ready to bolster the IRS!
Then there’s the additional spending on Pell grants, to the tune of $17 billion over the next three years. Eventually, this gets offset by changes to the student loan program, eliminated subsidized loans for graduate students and eliminating loan repayment incentives. I believe those were both features of the President’s budget. Still, you have increased direct spending on Pell grants in this deficit reduction package.
Because the spending cap starts relatively high, the plan only reduces spending by $1 billion in Fiscal Year 2012. I know a lot of liberals are snickering at this one, but this is exactly what we should want to happen, and it provides some hope that all of these bills will be relatively benign in the near term, and just non-expansionary rather than contractionary. This will not come as a pleasant surprise to the right-wingers in the caucus, however.
Then there’s the fun with baselines. Boehner’s bill almost reaches its target, with $1.1 trillion in spending reductions from the January 2011 baseline. However, in between January and now, we had the 2011 appropriations deal, which cut spending by at least $250 billion in the ten-year budget window. So from that baseline, the cut is only $850 billion. Who leaped to Boehner’s aid on this one? None other than Jack Lew, the Director of OMB. Clearly everyone in the process wanted to use the earlier baseline to show a bigger deficit reduction number without actually doing the cutting.
While we disagree with the approach that Speaker Boehner chose to take in this bill, there is one thing that we all still agree on, and that is the size of the problem. Both the House Republican budget proposal unveiled by Congressman Ryan on April 5 and the President’s fiscal framework that he introduced on April 13, set as our goal deficit reduction of $4 trillion. Since both of these plans were introduced before the agreement on appropriations for FY 2011, the baseline used for them did not reflect the spending cuts enacted this year in that legislation. Indeed, throughout our weeks of talks, all parties have worked off a January baseline because we all recognized that we needed to start from the same place.
That is why it would be confusing to judge the current proposal’s savings from the “adjusted March 2011 baseline” which CBO released in May.
This was a way to sneak about $250 billion in phantom cuts through, and CBO went and ruined it by naming the two separate baselines.
Clearly stung by this report, Boehner is having staffers retool the bill, to achieve that $1.2 trillion in expected savings. The measure will now likely get a Thursday vote. But the damage has already been done, in all likelihood. Boehner didn’t have a ton of trust among his caucus before this debacle, and he has even less now. The far-right conservatives just don’t feel like the spending cuts will come to pass.
But more vital for Boehner, and the country, is that his plan, even if passed into law, would trigger a debt downgrade, something seen as unavoidable at this point. Now, I maintain that S&P and the other rating agencies are really crossing the line by picking winners and losers among the legislation of a sovereign nation, but the fact remains that they favor the Reid plan. Boehner remains in denial about this, and about the prospects for his own plan. But it’s not looking deniable for much longer.
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Well none of that is going to please our social climber President.
http://krunchd.com/hiredtodoajob
EverNewEcoN
All these plans are smoke and mirrors. We cannot cut our way out of this problem, there will have to be new money. The people involved are ideologically incapable of accepting that fact.
Boxturtle (Obama has shown his true colors in this debate. Including the yellow stripe down his back)
To deal with Medicare/Medicaid fraud and abuse (which does exist) “costs” money. Assbackwards thinking…corporate influence.
Perhaps we need a constitutional amendment that says that no bill from Congress shall have more than one item contained within it. No add-ons, no multiple entries to attract other votes, no including of anything that is not truly logical as being directly associated with the core item.
Then the Congress can vote yeah or nay on a pure majority vote on each and every item, we can see where the will of the legislators (not the people) really lays, and the president wouldn’t need a line item veto since each item would be a bill unto itself.
All this bundling into magic packages in order to creat “grand designs” and people pleasers has just become a truly nonsensical exercise. It’s like saying that an amendment to the defense bill regarding duck migration is really about national defense because the ducks are a threat to aircraft flight.
What does the acronym KISS stand for again? Maybe we need an e-mail campaign to our congressional representatives and the president just saying “KISS”.
All I care is that, at the end of all of this, the Tea Party and its adherents are totally discredited and run out of town on a rail.
Oh, wait… there won’t be any more rails, because there won’t be any way to pay for it.
Dirt path for you guys (no interstates either!).
Sadly, no matter what happens, those who deal in fantasy thoughts of how things work will not have learned a thing. There will always be someone else to blame. Example: Reaganism. Ask why supply side economics hasn’t worked, and there are always a million reasons, and non of them is ever, for these people, that it’s a flawed or false belief.
BTW, I assume you do realize that the “rail” refered to is a fence rail. Google “Riding the rail”. Those colonials sure new how to show someone a good time.
I sincerely believe we get what we vote for:
We vote for the dumbest people, the people with the least to lose, the people with vacuum for brains, and expect them to deal with problems that anyone with a high school education could cope with.
We vote for lawyers, who’ve never run a business.
We vote for career politicians, who have no idea what it is to deal with real life outside the bubble.
We started to vote for doctors, who had an inside track on how the health insurance industry worked, and then we didn’t listen to them.
We vote for women because they’re supposed to be less corrupt and then the men essentially tell them to sit down and shut up (to wit, the incident last week between Wasserman-Schultz and West).
We vote for rich people because they’re the only ones that can afford to run, and then watch them get richer as they get bought and paid for by lobbyists and the very industries they’re supposed to monitor and regulate (and I know this first hand, as Dodd was my Senator for a very long time).
The rules of negotiation insist upon compromise and neither side understands the definition, so nothing gets done and we find ourselves on the brimk of becoming a third world country.
Insert the definition of insanity here. Because we really do expect a different outcome every two to four years, don’t we?
The voting system is rigged. 75% of seats are gerrymandered meaning a repub or dem will win it, guaranteed. As for the rest you need money to run, which means we don’t really get choices. People need to wake up and see it for what it is. We don’t have a democracy it is a rigged game.
Obama will love thi GOP plan.
It improves Pell Grants, he will tell us, and most people won’t realize they just lost SS, Medicare and Medicaid.
If you think America’s Got Talent, you should also know that Washington has a slew of no talent phoneys.
I’m confused by this: “we had the 2011 appropriations deal, which cut spending by at least $250 billion in the ten-year budget window.” I thought the deal that prevented the government shutdown only cut $38 billion over ten years. Why weren’t the democrats in an uproar if it cut $250 billion?
Went to my daughter’s college graduation a few years ago and all five phd’s in engineering went to non-Americans. One of the worst thing we can do is cut college grant and loan programs. Stop all the smoke screen wars and we all can live like republicans.
…worst thingS we can do is cut college grant and loan programs.
I find some issues with some of your comments.
We vote for “clever” people, not dumb ones. Clever people who know how to reach into the most base instincts of the voters and elicit identification and a following.
We don’t listen to the lawyers who understand the law, we get the lawyers who tell us what we want to hear, or how to work around the law to get what we want today.
Operating government like a business is what’s got us to where we are today. Too many businesses are examples of chaos, and are totally self serving. Too few business owners understand much outside of their own limited field of experience.
I don’t believe that women are any less or more capable of ruling than men. But the same ego centered selfish traits that makes a male political candidate successful also makes a woman candidate successful. And these are not the best traits for a person in a representative form of government.
We vote for the rich because that’s who the political establishment offers us, and we convince ourselves that a person lacking of means is a failure and why should we want them in office.
The rules of negotiation are that both sides come to the table in a sincere manner, with not too outlandish of demands, and that a real dialogue ensues. But it also includes the concept that a chief negotiator will believe in the position of his own side. Obama doesn’t, and neither do the blue dogs.
When a society embraces selfishness as the greatest of all virtues, and demands ideological purity to mythological causes, it ends up in a situation where nothing ever comes to completion in a positive manner.
Boehner’s bill is a way to suck the left in – now that is irony but we have a far right Democrat as President but he will be re-elected because if only one term he is a failure and we can’t have the first black president a failure.
Boehner’s bill’s downsides are the need for a second debt ceiling bill in a year, and the fact that his bill says that if catfood 2 is not passed, there will be no second bill.
So we get sucked in on first debt ceiling increase, only to get screwed on the second.
there is “no win” for the American people.
We don’t have to cut spending or raise taxes, and we won’t have to until (as it inevitably will) Congress shifts healthcare spending from employment-based insurance to a Medicare for All system. So in that sense, ANY fiscal tightening (cutting spending or raising taxes) before that day is simply a drain on future Medicare spending. Beyond that, budget deficits always go up and down in sync with unemployment.
The recession start is now pegged at December 2007. At that time, unemployment was 4.4%, the budget deficit 1.2% ($163 billion out of $13.8 trillion GDP) and, here’s the kicker, the trade deficit was 5.1% ($711 billion). In other words, even with the Bush tax cuts, the demand leakage created by the trade gap left us overtaxed (or underspent) by over half a trillion a year. Since govt deficit = domestic private savings + trade deficit, anytime the trade deficit exceeds the budget deficit, the govt is draining away private savings. The same thing happened in 2000 with Clinton’s budget surplus. Unless we zero out the trade deficit with tariffs or at least subtract it out of budget calculations, it will continue to kneecap economic recoveries.
Of course the FIRE sector was taking such an outsize share of national income, a market crash was inevitable but it was (odd as it sounds) Bush’s too restrictive fiscal policy that pushed us off the ledge. And then after the crash, we should have restructured the FIRE sector (letting bad banks fail and taxing Wall Street casino bets for starters) and boosted Ag Demand while reducing income inequality with a negative income tax system (in recent years, only Bob Reich has been out pushing Nixon’s pet project) and by making Medicare universal. We’re stuck in the economic doldrums because none of this was done… and will not be done in the foreseeable future.
“When a society embraces selfishness as the greatest of all virtues, and demands ideological purity to mythological causes, it ends up in a situation where nothing ever comes to completion in a positive manner.”
Nicely said.
anytime the trade deficit exceeds the budget deficit, the govt is draining away private savings???
individual people chose to spend more by buying from abroad, decreasing their savings, and this was caused by the Government not running a larger deficit because giving a tax cut to prevent the “no deficit” puts more money in the hands of the rich who send it overseas to untaxed bank accounts and that makes for higher savings, which is a good thing. Seems Bush was into MMT
Where are individual people better off via that tax cut for the rich that improved “savings”????
And let’s not forget that Bill Frist and Tom Coburn are doctors…god help us if we “listen to” them.
And actually, law practice s a business with payrolls to meet etc. Not that the elected lawyers are necessarily ones who ran their firms. Just let’s not paint with too broad a brush here.