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Debt Ceiling Deal Reached, First Votes This Afternoon

August 1, 2011 - by Donny Shaw

The deal is in. In exchange for raising the debt ceiling by $2.4 trillion — enough to last through the 2012 elections — Democrats have agreed to just about every Republican demand. Here’s how it goes:

  • Debt ceiling would be raised by $400 billion immediately, and by another $500 billion whenever Obama certifies to Congress that he needs it.
  • $900 billion in discretionary spending cuts would take effect beginning in 2012.
  • Obama will be allowed to raise the debt ceiling again, by $1.5 trillion, when he certifies to Congress that it is needed.
  • The second debt-ceiling increase will trigger the creation of a special committee (a.k.a. “Super Congress”) of 6 Republican lawmakers and 6 Democratic lawmakers tasked with proposing at least $1.2 trillion in additional deficit savings. Spending cuts, revenues and entitlements will be on the table, though with an even split between the two parties it’s highly unlikely that the committee would approve any new revenues.
  • The Super Congress recommendations would get expedited consideration in the House. No amendments would be allowed. In the Senate, debate time would be limited and no filibusters would be allowed.
  • If Congress fails to pass the Super Congress’ plan, an across-the-board spending cut of $1.5 trillion would automatically take effect, including cuts to Medicare and the military.
  • The Senate and House would be required to vote on a Balanced Budget Amendment to the Constitution, but nothing would be predicated on its passage.

As I explained last week, this has been one of the least transparent legislative processes we’ve seen in recent years. The bill was negotiated entirely behind closed doors, and with no solid proposal until now there’e been no chance for meaningful public review. We’ve been urged by the President to support “compromise,” but we’ve been locked out of seeing what we were actually being asked to get behind. When you look at which deficit-reduction proposals the public actually supports, it makes sense why this was done so secretively. All of the proposals that are supported by a bipartisan majority of Americans — e.g. raising taxes on the rich, limiting corporate tax deductions — were taken off the table long before the real negotiations even began. The “compromise” we were asked to lobby our members of Congress on, but not allowed to see, was between a bunch of stuff that’s only popular with the Very Serious People in Washington.

You can read the full legislative text here.

The deal is being rushed to a vote, probably later this afternoon in the Senate. The votes appeared to be lined up in the Senate. Getting it through the House may be more of a challenge, however. As David Hawkings wrote today in his Daily Briefing email, “the formula for making a majority in the House is not as clear, and it gets more complicated every hour the bill lies out in the sunshine — where it will be poked at and spurned by more and more advocacy groups and their congressional allies at both ends of the ideological spectrum.” Quick, get this thing to a vote before those pesky citizens realize they don’t like it and start getting all obnoxious about holding Congress accountable and stuff!

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Comments

  • mathiasthebold 08/01/2011 7:52pm

    The only thing accomplished by this bill, in the big picture analysis, is to kick the can ever further down the road in an attempt to appease the millions of frightened welfare recipients who wish to see their stipends continue unabated for the rest of their lives.

    A very rude awakening is on the horizon for a large part of the sedated American public. When foreign lenders like China decide to hike interest rates on the borrowing our Government does to finance this kind of spending, or perhaps worse, when lenders cut us off completely, and the the Federal Reserve creates new money to finance expenditures that can no longer be paid for through borrowing, then we will have to bite the bullet and experience the real recession which never actually was allowed to happen during the 2007-2009 period. Politics as usual will indeed come to an end. The fairy tale of spending endlessly will not last forever, and when that time comes, there will be a lot of very upset, helpess people in America.

  • g4jaxn101 08/01/2011 10:55pm

    The Democrats faileded to legislate, stand together and pass a clean debt ceiling bill. Instead they caved in to the Republicans and in turn failed the American people. This should have been a clean bill with nothing attached. All of the Republican issues should have been addressed separately from this. Instead the Democrats got down on their knees, hugged the Republicans legs and kissed their ass. PATHETIC! Speaker “Boner” gets 98% of what he wanted!

  • PECO 08/02/2011 4:19am

    Is there good reason why they have to dealt with closed doors?

  • jessica81 02/02/2012 7:58pm

    It would be nice if someone could address the interest rate risk that we are all facing. It’s hard for so many people to just be able to hang on to their homes these days.

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