The Debt Ceiling Agreement: The basics made simple, a range of views. Add your own 2 cents! (no pun intended)
The following information comes from an excellent summary by the National Women’s Law Center, ”Congressional leaders and the Administration have reached an agreement that would allow the debt ceiling to be increased so that the nation can pay its bills and avert a disastrous default, but at a painful price. The deal would make deep cuts to vital programs without ensuring any increase in revenues to contribute to deficit reduction. However, critical decisions will be made over the next few months that will determine whether there will be even deeper cuts – or whether millionaires and corporations will be required to contribute their fair share.”
- Nearly $1 trillion in discretionary spending cuts over ten years. More than half of the cuts would come from non-defense spending. However, another provision means that discretionary programs dealing with education, aging and poverty programs cannot be reduced to shoulder increased defense spending, at least initially.
- A bipartisan congressional “super-committee” charged with proposing another $1.5 trillion in deficit reduction over ten years. The super-committee may consider further cuts to discretionary programs; cuts to any entitlement program (including safety net programs such as Medicaid, Social Security, and SNAP/Food Stamps); and revenue increases, in any combination. The committee’s recommendations will receive an up or down vote by the end of 2011.
- Automatic cuts (split 50/50 between defense and non-defense) to take effect in 2013 if the super-committee’s plan is not enacted or fails to achieve at least $1.2 trillion in deficit reduction. Key mandatory safety net programs, such as Medicaid, Social Security, and SNAP/Food Stamps, would be exempt from automatic cuts, as they have been in past automatic deficit reduction plans; Medicare cuts would be capped and limited to providers.
- The deal does not require any increased revenues to contribute to deficit reduction (tax cuts enacted during the Bush era are a major cause of increased deficits). However, the super-committee will have the authority to raise revenue as part of its deficit reduction plan.
What will be cut immediately? Initial cuts will come from so-called discretionary funding. The National Journal has a good summary. You can see details for each sector using the following links:
The good news for many is that neither Medicaid, Medicare, or Social Security will be included in the original round of cuts. The bad news all of these programs are vulnerable when additional cuts are made by the Super Committee.
Several viewpoints on the deal: The following links provide various opinions on the wisdom and impacts of the ” new-New Deal” ranging from the President himself, to critical views from the left and the right. You can probably guess my own views, but now its time for yours:
President Obama (video)
Paul Krugman (Nobel Laureate Economist, Columnist NY Times)
Robert Reich (Former U.S. Labor Secretary under Clinton)
Congresswoman Michele Bachmann (Presidential Candidate, R-MN)