Federal Budget Deal Is Reached

By Loudoun Insider

I hope it sticks – the time for fooling around with this is way past, and this appears to be a good start in the right direction.  Of course it isn’t perfect, but what is, especially when referring to things that come out of Washington DC?


Comments

  • edmundburkenator says:

    Not enough. Unless the select committee comes up with something better in November, we get a downgrade (of course, we could get one sooner).

    As Cato has mentioned in an earlier post, if the agreement yanks a lot out of the economy in the near term that will stall the economy (it’s already there anyway). We may head into double-dip. I would like to see what gets cut near-term.

    In the end, Republicans seem to get ultimately what they wanted: an economic environment that makes a one-term Obama administration much more likely — with a lot of Obama’s help.

  • There will be no downgrade.

    In the category of not getting everything you wanted, the Rs (and Tea Partiers) did compromise in only requiring a vote on a balanced budget amendment, not Congressional passage. I agree with McCain that it’s unlikely to get through the senate and the president, but at least it will call out the senators voting against it.

  • Dan says:

    ed, I’m not sure the Republicans believe they can beat Obama in 2012. Over at Political Wire they have a screen shot from GOP.com of a piece asserting America must change direction. Complete with a picture of the president over the words “Obama’s last day”. In the upper right hand corner they list the date as Jan. 20, 2017.

    I think there is a pretty good chance they have that date right, but I don’t think that is the message they mean to be sending out. I guess the incompetence at the RNC didn’t end with Michael Steele’s departure.

    Always nice of the RNC to give us our Monday morning smile.

  • edmundburkenator says:

    I still haven’t seen the details but am hearing the cuts are backloaded (something less than 1 percent come in FY12), so the barely growing economy gets a bit of a reprieve there.

  • RichmondDem says:

    There’s not going to be a downgrade. The rating agencies don’t *want* to have to do a downgrade unless absolutely forced because the US issues something like 60% of all AAA sovereign debt in the entire world. They’ll look for any excuse not to. Hell, we should have been downgraded *years* ago and if we were a smaller country we would have been.

  • RichmondDem says:

    Also funny how the GOP completely forgot about the BBA from January, 2001 to January, 2009. I wonder why that was?

  • Dan says:

    RichmonDem, don’t be silly. When GWB came into office in January 2001 he inherited a balanced budget. Since both the White House and the Congress were controlled by true fiscal conservatives at that point (sorry if that caused you to spew coffee all over your keyboard when you laughed at that one) there was clearly no need to pass a BBA because all those true fiscal conservatives would never blow up a sound fiscal position like that.

  • G.Stone says:

    The downgrade will depend on those agencies belief if this admin and gov’t are serious about long term reforms.

    I tend to agree with lloyd. This is largely a victory for the those new members of congress who have changed the conversation from one of Obama spending increases, to one of cutting spending. For this we can be grateful.

    The obama admin within 20 plus months have accomplished the following:
    1. Took an ailing economy and drove it to the brink of terminal illness.
    2. Brought about the emergence of a new political movement dedicated to reigning in spending
    3. As a result of 1 and 2 above made cutting spending the number one issue in 2012, while breathing life back into the Balanced Budget ammendment.
    4. Removing Jimmy Carter as the worst president in our nations history. Please don’t take it from me just ask Maureen Dowd.

  • Leej says:

    Looks like a good chance the House may not pass this.

    And a downgrade is very realistic.

    And if the government does not eventually have a balanced budget and major spending cuts our economy will not recovery.

    The housing industry is the key to recovery and with all the foreclosures we lost many home buyers. So we may not see a recovery in housing until these foreclosures are off peoples credit reports which can be 7 to 10 years.

    And what made the housing boom was also easy money and credit. Which also caused it to crash.

    Besides many people that got foreclosed on would of been able to keep their homes if they could of got a decent interest rate in the end.

    Banks and investors want to foreclose because they actually make a lot of money on many of them thru insurance and other ways.

    These stupid wars we got ourselves into also hurts the economy when they end.
    Wars are terrible for the economy in the long term. ANd the sooner we go into a peace time economy the better. It will hurt short term but will be great in the long term.

  • One thing on the bright side of this.

    As inept and as partisan as our government may be, in the end, they still managed to avoid complete self-destruction. For better or worse, that should somewhat comfort the credit markes the next time we’re in this situation (of course, it was the press that was more rattled than the credit/bond markets).

  • Dan says:

    “Looks like a good chance the House may not pass this.”

    leej, you may be correct. House GOP leadership delayed a press conference on the upcoming vote. The teabaggers may be proving recalcitrant. The votes may not be there.

    A reporter asked Nancy Pelosi if the votes were there to pass it. She responded, “You’ll have to ask the Speaker. He has the majority.” He has it, but does he have sufficient control to use it constructively?

    Hoyer estimated about 65 to 70 Democratic votes for this deal. I think they can produce more. But if Boehner expects that a majority of his caucus can vote against this and rely on Pelosi to pull his chestnuts out of the fire I think this thing loses.

    Talk about wanting to have your cake and eat it too. They get the vast majority of what they want but still want to have the political cover to go to the most extreme elements of their base and brag that they didn’t vote to increase the debt ceiling. And they expect that Democrats should provide the votes to allow them to do this phony little dance?

    These teabagger Congressmen are almost enough to convince you that term limits make sense.

  • Isophorone says:

    Budget deal or debt deal? Congress still has to pass a budget (or a continuing resolution) by September 30. Are we going to get more brinksmanship?

  • Fred says:

    Dan – Without conservatives dominating the House; the debt limit would have passed without altering the trajectory of Federal spending and tax rates would have risen. If you enjoy GDP increasing at a tick of 1.3%, then you would love the effects of raising taxes in this economy. When Republicans have only one of the 3 seats at the table of effecting Federal policy, I say job well done on fighting for our core values.

    Making Harry Reid the Senate Minority Leader and sending President Obama back to Chicago, Hawaii or Indonesia, (whichever he calls home), is the next goal to bring real reform to the budget and debt mess we are in.

  • Dan says:

    Isophorone, the failure to raise the debt ceiling will make putting a budget together for the coming fiscal year far more difficult. No matter what your viewpoint of the size and shape of that budget.

    The needless addition of higher borrowing costs means something else has to go from the budget, whether that something is teaching 3rd graders to read so you don’t end up putting as many of them in jail cells ten years from now or upgrading the air traffic control system or taking care of the vets who left limbs in Iraq and Afghanistan. We get nothing for the extra billions in interest we will end up paying if we default on our current obligations.

  • Dan says:

    “When Republicans have only one of the 3 seats at the table of effecting Federal policy, I say job well done on fighting for our core values”

    Fred, if we leave aside for a moment that 47 Republican Senators allows the GOP to bring that body to a grinding halt under the peculiar rules of the Senate and let your well worn talking point stand for a moment that still leaves an important question unanswered. If this is such a great victory for their “core principles” then why is it proving to be so difficult to get so many of these “deeply principled” teabagger Congressmen to vote for it in the House? And when the votes are cast can I assume that the Republicans who vote against it are unprincipled scoundrels?

  • squiddy says:

    Just remember, Lloyd, as a Representative Republic, this “inept and partisan” government is a reflection of ourselves … ;)

    Anyway, this is a start – but let’s not forget the unfunded liabilities of Medicare and SSI – that makes this almost $15T debt look tame by comparison. And we still may have to face a time in the not-so-distant future when our debt service reaches $500B a year.

    Moody’s has made statements regarding these program debt levels and our bond rating – I don’t think a downgrade is inevitable, yet, I don’t see that our politicians will be able to get out of the way of it.

    I don’t know that a BBA will pass at this point – but you know, we didn’t need a Graham-Rudman-Hollings act until we needed it, either.

    This is also an opportunity to fix the federal income tax code – personally, I’m in favor of a vast simplification of the code, with a FET/VAT/consumption-based component. As the cost of regulation and compliance goes up, yet more money goes “underground” to avoid it. A very modest VAT will help expose at least some of it to taxation, hopefully raising tax receipts, without raising taxes on most individuals, and without it being unduly regressive.

    The alternative will be increasing “envy” taxes like the AMT and capital gains, (which usually punish the middle-class more than the millionaires who can afford to hire accountants), sin taxes, and other revenue enhancers.

  • Dan says:

    “Without conservatives dominating the House; the debt limit would have passed without altering the trajectory of Federal spending and tax rates would have risen.”

    Fred, if you think this agreement fundamentally alters the trajectory of federal spending (or even meaningfully addresses the things driving increased spending) you may want to take another look. And there is nothing in this agreement that prevents taxes being sensibly raised in the future. By sensibly, I mean as part of an overall tax reform that might include both raising and lowering of various taxes to make the system more rational than it now is and to encourage economic growth.

    I know the whole corporate jet thing has been beaten to death lately but I think more jobs are likely to be created by giving more favorable depreciation allowances for equipment to my neighbor with the landscaping business and other businessmen like him than giving more favorable tax treatment for corporate jets. Now if I sold corporate jets I might feel differently about that. But if you want to create jobs you might want to give the better tax break to the folks who are most likely to do the hiring.The small businessman.

    But getting back to the deal that is about to be voted on, it does not prevent the select committee from proposing raising taxes any more than it prevents them from proposing any sort of spending cuts. And if they put actual fiscal conservatives on that committee they may well propose both. And the automatic cuts in the proposal that would be triggered by failure to agree to the committee’s recommendations seem to be odious enough to both sides in some respects that a good package may result. One that is fiscally conservative as opposed to simply being mindlessly anti-tax.

    There is also nothing in this agreement about the Bush tax cuts. Although we should more properly call them the Bush/Obama tax cuts since Obama extended them for an additional two years. If the select committee fails to take a swing at comprehensive tax reform then we can take another shot at it after the 2012 elections. Those cuts will expire in December 2012 if no affirmative action is taken to extend them further. No tax reform? No extension without it.

  • edmundburkenator says:

    “This is also an opportunity to fix the federal income tax code…”

    Congress is where opportunities go to die.

    I’m interested to see who will be on the select committee and what the rules are that govern the body.

    I hope the tax code gets reworked as well, but lobbyists only have to target a small group of people now. Savings there too!

  • edmundburkenator says:

    The Bush Tax cuts are the unspoken revenue component to this agreement. They are also the unspoken additional trigger (incentive to act).

  • LloydTheIdiot says:

    “Congress is where opportunities go to die.”

    Very funny!

  • Fred says:

    Dan, long-term tax reform and simplification is on the agenda for the House GOP. However with Obama in the White House and Harry Reid in the Senate continuing to engage in class warfare, I’m not holding my breath for any significant changes. My hope is whomever the GOP nominee is next year that he or she make it a critical part of their reform agenda and use their election as a mandate for change. Personally I’d rather see a flat tax over a consumption tax, but either one is better than the current system.

  • Leej says:

    http://www.leesburg2day.com/news/article_2dafd48c-bc6e-11e0-92d0-001cc4c03286.html

    What is bad for Virginia and DC will be good for the rest of the country. Do we keep the government workers and contractors fat and happy at the expenses of the rest of the nation.

    Also these defense contractors that moved their headquarters here recently was nothing more then for their top people to be close to the seat of the government to lobby. Only hundreds moved not thousands.

  • RichmondDem says:

    After today I can’t tell if right wing talk radio or DailyKos and other leftish blogs hate the deal more. I’ll take that as a somewhat positive sign .

  • RichmondDem says:

    The bad thing is I’m not sure the Republicans fully realize the precedent they’ve set here. What happens in 2019 when Speaker Chris Van Hollen refuses to raise the debt ceiling unless President Rubio agrees to a tax increase? If this stunt becomes a matter of course we’ll be downgraded all right–not to AA+ but to junk status within 15 years.

  • edmundburkenator says:

    Funny you mention defense contractors Lee. I just read a post that considers what the Defense and the Health Care Industry think about these triggers — they are terrified and already in full gear.

    From the post:

    Washington is “pointing a gun to the knee caps of corporate lobbyists for the defense contracting and medical provider communities and saying, ‘Help us, or else’”

    Interesting quick read:

    http://swampland.time.com/2011/08/01/special-interests-to-the-rescue-why-lobbyists-are-a-key-part-of-the-debt-limit-deal/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timeblogs%2Fswampland+%28TIME%3A+Swampland%29

  • Cato the Elder says:

    Sources are telling me that the votes are there in the House, and that it won’t even be close.

  • RichmondDem says:

    Yup, Pelosi is on board. Game over.

  • Leej says:

    Passed the house easily

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