Avoiding Depression Over The Debt Ceiling Deal

Yes, the news is pretty bad, but we all expected that once we started negotiating with terrorists the outcome would not be the greatest. I’m avoiding depression by remembering that things really could have turned out far worse. In other words, the Republicans could have won even more if they were  prepared to negotiate seriously before the last minute as opposed to having their own hostage situation with the Tea Party people.

There’s no point in writing about all the negatives. Many people have already done that. I figure it is worth linking to a couple of the stories which do find some positives in this. For example, Jay Newton-Small has five things for liberals to like:

The 2012 budget: At one point in the negotiations, the 2012 budget was to be slashed by $36 billion. The final number of cuts: just $7 billion. And just to ensure we don’t have another bruising government shutdown fight over cuts in September, the deal deems and passes the 2012 budget. Yes, that’s right, the old Gephardt Rule or Slaughter Solution, is back. What’s deem and pass? It’s a legislative trick that essentially means that Congress will consider the budget passed without ever actually having to vote on it.

The trigger: This is counterintuitive, but the trigger is actually pretty good for Democrats. For all that MoveOn thinks that it would force benefit cuts to Medicare, Medicaid and Social Security, it actually wouldn’t trigger benefit cuts to any entitlements. The only cuts it would force would be a 2% or more haircut for Medicare providers. And House Minority Leader Nancy Pelosi, along with most Democrats, has never opposed provider cuts. Not only that, most progressives actually want the Pentagon cuts. So if the committee deadlocks and the trigger is pulled, Democrats won’t be miserable.

The commission: Again, for all the liberal carping about a “Super Congress,” the commission of 12 members — three from each party in each chamber — set up to find the second phase of $1.5 trillion in cuts by Thanksgiving is actually rigged to force some revenue increases. Yes, the Bush tax cuts are off the table. But there are plenty of loopholes, subsidies and other corporate welfare programs that are on the table. And with such a strong trigger, it’s hard to imagine at least one Republican not voting to kill corporate jet subsidies over slashing $500 billion from the defense budget – even if the revenues aren’t offset. The question is: who are Republicans more afraid of, Grover Norquist or the joint chiefs? Democrats’ money is on the joint chiefs.

The immediate cuts: It may seem like a lot, but the $917 billion in the first phase of cuts were carefully negotiated by Vice President Joe Biden and his group. They include $350 billion in Pentagon cuts – a win for liberals. They don’t touch entitlement benefits, another win. And they set top line numbers for the next decade of budgets that aren’t draconian. It still cuts where liberals might prefer to spend, but most of the savings are backloaded to avoid extreme austerity in next few years of fragile economic recovery.  Just $7 billion would be cut in 2012, and only $3 billion in 2013. And of that combined $10 billion, half would come from the Pentagon. On top of that, the discretionary spending caps on budgets in future Congresses are subject to revision by those bodies.

The debt ceiling: Raising the debt ceiling through 2013 will not be contingent on the second round of cuts. There will merely be a vote of disapproval. This avoids another messy fight in January and another round of painful forced cuts.

Nate Silver has more on the good parts in the fine print of the deal.

I have my doubts as to whether the commission will accomplish anything worthwhile.  GOP leaders will choose members hey are sure will not go for any tax hikes and want to limit spending cuts to areas  where we would least want to see cuts. This means we will probably to to the trigger. Cutting defense spending wouldn’t be all bad. As a physician, I am not thrilled by the trigger of a 2% cut in Medicare, but I still need to check out the details. Worst case scenario is an across the board cut in the fee schedule for all Medicare services.  In the past, percentage increases or decreases in Medicare have been a total for the program, with some services changing by more or less than the overall percentage. As long as they have some leeway legally, I bet that they would prefer to cut more than 2 percent in some areas in order to avoid a cut in primary care services (sparing me from the cuts). I’m also not going to worry about a possible 2 percent cut when cuts of more than ten times this are scheduled under  the sustainable growth formula. If Congress can overrule the sustainable growth formula every year, they can also intervene to alter the effects of the triggers.

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11 Comments

  1. 1
    Steve Austin says:

    Avoiding Depression Over The Debt Ceiling Deal Liberal Values: I'm avoiding depression by remembering that thing… http://bit.ly/pVGAbA

  2. 2
    John Sonntag says:

    RT @ronchusid: Avoiding Depression Over The Debt Ceiling Deal #p2 #p21 #topprog http://t.co/WWKj1sr

  3. 3
    Alden Counseling says:

    Avoiding Depression Over The Debt Ceiling Deal Liberal Values: Yes, the news is pretty bad, but we all expected … http://bit.ly/mU9TXs

  4. 4
    John Chase Maxwell says:

    Avoiding Depression Over The Debt Ceiling Deal – http://t.co/ujlkO3B

  5. 5
    Dave says:

    You liberals love to talk and blame, but here’s truth about the debt: http://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm
    The is is the cost of failing to cut spending you pathetic liberal moron.

  6. 6
    Ron Chusid says:

    It was Republicans such as Bush and Reagan who have been the big spenders. The morons are the people like you who buy the lie that it has been Democrats and not Republicans who are responsible for the deficit and financial crisis. It was the uncertainty created by irresponsible GOP actions in Congress which further exacerbated the problem.

  7. 7
    Dave says:

    Really Ron? Really?  Too bad the S&P says something quite different. From the text of the S&P statement: http://www.zerohedge.com/news/sp-downgrades-us-aa-outlook-negative-full-text
    We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related  fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements . . . the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
    It was the lack of real commitment to do anything about spending is why the tea party resisted raising the debt ceiling. Even modest tax increases would have been OK if you guys were at all serious about spending but you weren’t and the S&P called you on it. 

  8. 8
    Ron Chusid says:

    You are taking things out of context here. The “prolonged controversy” was created by the Republicans. You leave out the part where S&P attributed the problem to the GOP’s policy on taxes. The spending problem as well as the deficit were created by irresponsible Republican policies. It is the Democrats who have been pushing for a responsible solution to cut the deficit. The “prolonged controversy” created by the Republicans and their unwillingness to consider any tax increases at all brought this on. The key part of the report you didn’t bother to quote:

    We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act

  9. 9
    Ron Chusid says:

    Plus the downgrading would have been even worse if we got no deal at all. In preventing a reasonable deal, along with your other idiotic beliefs the Tea Party has probably become the greatest threat to preserving our free market system in our history–doing far more harm than the Socialists and Communists ever were able to do.

  10. 10
    Dave says:

    Dream on Ron.
    The great liberal experiment of the 21st century is now at an end. 
    You “think” a reasonable deal could have solved what’s happening in the economy right now? You “think” the tea party is responsible for what the the Daily Capitalist talked about here OVER a YEAR ago?
    We Warned You It Was Coming

    “… we have been forecasting economic stagnation for quite a while. So while most economists had believed the U.S. economy was headed for strong economic growth, we were warning that this was coming since February, 2010, and the data has borne us out. We believe that our foundation in Austrian theory economics has allowed us to give the only satisfactory explanations of what is occurring in the economy.”
    Massive spending & the instabilities and uncertainties introduced by Obama-care have driven the economy to a halt. Losing our AAA rating is a symptom of a larger problem began by big government neocons and now made worse by bigger government liberals. Blog on the party line but when the futures nosedive Sunday night and there’s another sell off Monday, you know who’s going to get the blame — and you guys deserve it.  The Tea Party? We’re fine and we’re going to be fine — better than you & your kind my friend.

  11. 11
    Ron Chusid says:

    That is a bunch of right wing fantasy totally unrelated to the facts. The massive spending came from Republicans, not liberals.

    “Obama-care” didn’t bring about massive spending. One difference between liberals and conservatives is that liberals support “pay as you go” while Republicans have opposed it. Obama’s health care plans are paid for. They cost less than George Bush’s Medicare plan (which was really corporate welfare for the insurance and pharmaceutical industries). While Obama’s plan is paid for, Bush’s was not. Bush even threatened to fire the chief Medicare actuary if he testified before Congress as to its cost.

    Health care reform decreases uncertainty and helps stimulate the economy. It relieves small businesses of the unpredictable and growing costs of health care costs. It frees people to leave big corporations and encourages the growth of more innovative small businesses by no longer forcing individual to remain with their current employers due to the collapse of the private insurance market in this country. It relieves the uncertainty of people in the individual market who are now at risk of losing their coverage if they get sick.

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