Despite my most pessimistic, and consequently most trustworthy, instincts telling me that we were going to default, here we are. The House and Senate have both approved legislation that will raise the nation’s debt ceiling and sent it to the President to sign, which he is expected to do.
Let’s look at the deal that has passed Congress, and what’s next.
The contents of the deal include the following:
- $2.8 trillion in deficit reduction; $1 trillion from discretionary, $1.8 trillion as determined by a Super Congressional Committee.
- The creation of a Super Congressional Committee to evaluate and recommend cuts to entitlement programs that would not be subject to normal congressional rules (no amendments, no filibusters).
- The Super Congressional Committee cannot recommend revenue increases.
- Congress must vote on a Balanced Budget Amendment to the US Constitution.
- Congress must vote on the recommendations of the Super Congressional Committee, or face mandatory cuts to both entitlements and defense spending.
Regardless of which side of the debate you’re on, this is a shit sandwich with a used douche milkshake.
If you’re on the liberal end of the spectrum, you’re scared to death that the Super Congressional Committee is going to gut Medicare and Social Security in the name of fiscal austerity, as well as the potential for the passage of a Balanced Budget Amendment, which has frequently been described as “the worst idea in Washington.” Also, you’re probably pretty pissed that revenue increases, which every reasonable economist agrees has to be part of any effort to close the debt, are completely off the table. Finally, you’re probably really pissed that House Republicans managed to hold the US economy hostage and managed to get pretty much everything they wanted.
If you’re on the conservative end of the spectrum, you’re pissed that the deal doesn’t include free ponies at Tea Party rallies. That’s really about it.
Here is some required reading for today.
For those of you looking for a quick summary, here goes:
Let’s say one dollar equals a trillion dollars. The US owes $14.27. $8.32 is public debt, which belongs to other nations, individuals, bondholders, etc. $5.95 is intragovernmental, which means it belongs to Social Security, Medicare, and the Federal Reserve. For intragovernmental debt, of the $5.95, $4.52 is money owed to the American people as part of entitlement programs. This is money we have all paid in to the system in the form of taxes. It’s actually a surplus, for those times when Social Security revenues exceeded expenditures. The rest is health care, infrastructure, and unemployment. $1.42 is owed to the Federal Reserve, who has over the last three years bought US debt as part of it’s quantitative easing program. Essentially, this is money the government owes to itself.
So, let’s ask ourselves a question: Bill Clinton left office with a balanced budget and a surplus, and 12 years later we’re having massive arguments over the federal deficit, which has mysteriously doubled since then. Here’s the question: how stupid is the American voting public that they don’t get exactly who is responsible for the deficit crisis?
Between the Bush Tax Cuts, the wars in Iraq and Afghanistan, and Medicare Part D, Republicans successfully managed to transfer $4.53 trillion from the US Government to the hands of the wealthiest individuals and the largest corporations in the country. Not only that, but in doing so they’ve managed to create one of the greatest concentrations of wealth in the hands of the fewest individuals in history.
Let that sink in for a minute.
See, there are two kinds of wealth: productive and unproductive.
Productive wealth is when an individual or corporation uses their money to invest in jobs, infrastructure, or really anything that puts that money to work. Productive wealth is a good thing. It’s how businesses get started, expand, thrive, etc.
Unproductive wealth is money that sits in accounts, untouched and unutilized. Unproductive wealth is the single greatest issue affecting the economic recovery.
See, American companies have plenty of money. It’s all there. They have money in the bank. Across the board, large corporations are raking in record profits, because during the recession they laid a bunch of older, higher priced employees off, and skipped raises and bonuses for a lot of people. That money could easily be repurposed to hiring new employees, starting new business lines, etc., but instead it just sits there, untouched, on corporate balance sheets because it makes the stock price go up. Were companies required to use that to hire people, things might be different. One in five Americans probably wouldn’t be un or underemployed.
But I digress. Why we’re here isn’t important. We’re here, and now it’s time to deal with it.
The next major fight will be the Bush Tax Cuts, set to expire in December of this year. This time, there’s no government shutdown and no debt ceiling to negotiate with. More importantly, the Bush Tax Cuts will automatically expire. No one has to do anything. They will just go away.
Of course, Congressional Republicans will fight tooth and nail to ensure that those cuts remain in place, as it’s a valuable tool for wealth redistribution.
After that, we lurch our way into presidential election season, wherein the GOP will double down on every single stupid piece of right wing wet dream legislation in an attempt to embarrass the President.
It’s going to be a fun couple of months.