This Bill Cuts Fools Gold

When House Speaker John Boehner first said the only way he’d raise the debt ceiling is if there were dollar for dollar offsetting cuts, I thought, “really?”  Historically, the third year in a president’s term is a time to move to the center, but not the time for monumental legislation.  This is more true for this president than for others, as three major bills were passed in his first two years in office, meaning his political capital was spent.  Now that I’ve looked at the summary of the debt ceiling bill the House is expected to pass, it seems history has held true.  This bill does very little.

The summaries boast $900 billion in discretionary caps over 10 years.  First a quick lesson in what “discretionary” spending is in D.C.  It’s everything except entitlements and interest on the debt, including USDA, NASA, Defense, EPA, the highway fund, etc.  It’s the government as we know it.  The main thing that distinguishes discretionary spending is that it needs annual fund appropriations from Congress.  Entitlements (Medicare, Medicaid and Social Security) are on auto-pilot.  A formula for spending is in law, and the government is bound to follow it.

So the biggest problem with this bill is it only deals with discretionary spending.  Do you remember what the debate in Washington was five years ago?  It certainly was vastly different than it is today, and we can expect that our priorities are nearly unforeseeable five years from now.  Because Congress must re-authorize that spending, it may very well decide to go a different route three, five or eight years from now.  Congress would simply have to change the caps that have been put in place as part of this deal.  So the $900 billion number is not set in stone.

The other major part of the bill is a bi-partisan commission that will recommend further cuts.  Anything this commission recommends gets a fast pass through Congress: no filibuster and no amendments.  That being said, I would be very surprised if Congress passed its recommendations.  Taxes will not be part of the proposal and so the Democrats will continue to balk at entitlement cuts.

Failure to pass the commission’s proposal leads to automatic across the board cuts.  So for 2013, there will be some cuts from this bill, and then the new Congress and the new President (or new term and mandate for Obama) will have to figure this mess out.

So this is, unfortunately, not over, but probably will be handled in a way befitting the major of issue of our day.  Politicians will campaign on the issue, voters will have their say, and then our government will use that mandate to tackle it.