Well THAT was close…

Last night President Barack Obama announced Democrats and Republicans in Congress have reached an agreement on a plan to raise the federal debt ceiling, an agreement that comes just days before our government was going to reach the debt limit and risk defaulting on the nation’s debts.

According to the details available, the agreement would slow the growth of government spending over the next decade by $2-$3 trillion and allow enough borrowing to put off another vote to raise the ceiling to 2013. About $1 trillion will be cut immediately, and the details of the remaining spending reductions will be handled by a bipartisan committee of 12 lawmakers from both chambers, who will recommend cuts for Congress to vote on. To appease the GOP’s conservative wing, the deal would also require a vote in both chambers on an amendment to the Constitution requiring the federal government to balance its budget each year.

Addressing reports of an impending deal between Democrats and Republicans on raising the debt ceiling, Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus, called reports of the deal “a sugar-coated Satan sandwich” in reference to the fact that the deal seems to be a better deal for Republicans than for Democrats, containing deep spending cuts without any mention of increasing revenues.

While I don’t know all the details of the “compromise” plan reached by Democrats and Republicans, if the plan is all spending cuts without addressing the issue of increasing revenue, then it wasn’t so much a compromise as a capitulation by Democrats. But hey, if there’s a silver lining in this, it’s that President Obama didn’t cave in and give Republicans in Congress the cuts to entitlement programs that they were looking for.

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5 thoughts on “Well THAT was close…

  1. Oh NOES!
    Sugar-coated Satan Sandwich
    I wish I wrote that – I love it love it love it!

    My guess is that it is (an SCSS) and also that the Dem capitulation will prove to be true.
    re: “silver linings” , the bar keeps being lowered and lowered AND LOWERED!!! so far, so fast, and so unrelentingly, that what would have seemed like enormous failures at other points in time now seem like modest victories. And sadly we all breathe collective sighs of relief at what is really “certainty” of years and years of more abuse.
    And those folks who persist in calling enormous failures just that are now seen as hotheads, spoil-sports, and ridiculous dreamers.

    1. I share your frustration about the bar being lowered to the point that what used to be epic failures are now seen as modest victories.

  2. if the plan is all spending cuts without addressing the issue of increasing revenue, then it wasn’t so much a compromise as a capitulation by Democrats.

    I’m thinking President Obama got the only thing he really cared about in not having to deal with it until after 2012. Or is that too cynical?

    1. I think it’s a tad cynical (not much, though – there’s undoubtedly truth to it).

      My contention is he basically got what he wanted on the substance. Listening to his administration’s framing and rhetoric, there’s really no other conclusion to draw. Been awhile since we heard anyone up there talk about anything other than a need to slash spending.

      Which is a brilliant plan, btw. JPMorgan:

      Impending fiscal drag for 2012 remains intact. The deal does nothing to extend the various stimulus measure which will expire next year: we continue to believe federal fiscal policy will subtract around 1.5%-points from GDP growth in 2012.

      Japan’s “lost decade” used to be laughed at by us. Until we decided it’d be awesome to repeat their exact same mistakes.

      1. Japan’s “lost decade” used to be laughed at by us. Until we decided it’d be awesome to repeat their exact same mistakes.

        How fitting that Bernake, so critical of Japan while in academia, is now piloting the ship.

        That said, I guess you can credit our insatiable appetite for consumption and poor savings rate for sheltering us from the deflation that’s been the real tarpit for them.

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