Deal update: $2.4T in cuts and ceiling hikes — both in two parts

posted at 8:42 am on July 31, 2011 by Ed Morrissey

ABC reports this morning that Congressional leaders have already begun briefing their caucuses on the eleventh-hour deal that emerged from the White House last night.  Jonathan Karl notes that the deal is contingent on getting enough support from each House caucus to form a majority, and in the Senate to avoid a filibuster.  We’ll come back to that in a moment, but Karl also updates the story on the deal.  The topline numbers are apparently $2.4 trillion in matching spending cuts and debt-ceiling raises instead of $2.8 trillion, but now both are split into two parts:

The current framework would give the president the authority to raise the debt ceiling in two parts: roughly half of it now and the balance at the end of the year.

Each increase would be subject to a Congressional resolution of disapproval.

If Congress voted to disapprove that increase, however, the President could veto their disapproval.

The AP reported earlier on the $2.4 trillion number, too, although they say the cuts will be “slightly more” than the debt-ceiling boost.  That’s still enough to get Barack Obama past the 2012 election, but not by much. It guarantees that the debt ceiling will be a 2012 election issue, although by now that was a given anyway.

However, the added McConnell wrinkle is interesting — and potentially a big win for Republicans.  Essentially, Republicans get to claim credit for the cuts while laying blame for the debt increases on Obama.  If they “disapprove,” Obama will veto the disapproval and end up owning all of the political baggage for the debt-ceiling increases.  That’s a steep price to pay for Obama just to protect himself through the next election, although he could turn it on its ear and refuse to veto the second increase disapproval and force this fight all over again.  That would, however, put the country back in “crisis” mode, and that would still be all on Obama.

This brings the deal closer to what I predicted yesterday; in fact, it almost matches it exactly.  But can the leaders get the votes for it?  If Obama endorses this deal, most Democrats will have no choice but to back it; after all, they have been doing the most Chicken Little screeching about the consequences of legislative failure.  Boehner and McConnell will lose a significant number of Republicans, but both will probably hold a majority of their caucuses.  I’d expect an agreement along these lines to pass quickly through Congress, maybe fast enough to avoid having to pass a $50 billion, two-week extension to gain time for the debate.

Update: Added “ceiling” to headline for more clarity.

Update II: McConnell tells CNN that they are “very close” to a deal.  I’d interpret that to mean that they’re shopping the deal to the caucuses to make sure they can get the votes.

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Now I know why my state of Texas only lets the legislators meet every 2 years and won’t let them spend more than the state has. Every Congressman and Senator knows we’re up to our eyes in debt. They are exactly like heroin users. They will tell you anything you want to hear as long as they keep getting their fix. It’s obvious that no amount of reason or rational thought is going to dissuade them from spending until we tie their hands and feet to a hospital gurney and get them off the drug. If that means electoral defeat, so be it. If that means balanced budget amendment to the Constitution, bring it on.

gordo on July 31, 2011 at 11:57 AM

jackal40 on July 31, 2011 at 11:43 AM
I hate to tell you this, but it is 7 Trillion after the 2.8 Trillion cut. If you did not have the 2.8 Trillion cut it would be 9.5 Trillion added to the 14.5 Trillion at the end of 10 years for a grand total of 25 Trillion in debt in 2021.

txmomof6 on July 31, 2011 at 11:58 AM

Chasdal,

Read some history before writing about history.
America is finished as an Empire.

angryed on July 31, 2011 at 11:58 AM

And as with all great empire collapses, America destroyed itself from within. What the USSR could not do in 50 years, Obama, Reid, Pelosi, Boehner and McConnell did in 2.5 years.

angryed on July 31, 2011 at 12:02 PM

Kind of like people that go into rehab and down a bottle of vodka before they walk through the door.

TxAnn56 on July 31, 2011 at 11:51 AM

Its the cash bar in the clinic that is the dead giveaway.

ajacksonian on July 31, 2011 at 12:07 PM

Unless those 2.4 trillion in cuts are coming prior to say Jan 5, 2013, when the new congress takes over, then we aren’t getting 2.4 trillion in cuts. If they are coming by then we don’t need a debt ceiling raise. This is an all around loss for fiscal responsibility. Spin it how you like but it is Wimpy economics on steroids.

chemman on July 31, 2011 at 11:30 AM

I’ll gladly give you a “mere” $4.0 trillion in deficit spending next Tuesday for a $2.5 trillion debt-ceiling hike today.

Steve Eggleston on July 31, 2011 at 12:11 PM

America, it was a nice ride.

leftnomore on July 31, 2011 at 12:12 PM

The thing everyones got to remember is that holding one house can stop really bad things from happening, maybe, but its not enough to make good things happen.

All we could hope for was to keep the current administration from selling the propellers off the ship of state before we get to 2012.

The other useful lesson is that no matter what, when push comes to shove the press will ALWAYS line up with the bad guys.

JEM on July 31, 2011 at 12:18 PM

And as with all great empire collapses, America destroyed itself from within. What the USSR could not do in 50 years, Obama, Reid, Pelosi, Boehner and McConnell did in 2.5 years.

angryed on July 31, 2011 at 12:02 PM

This effect is called the Feiler Faster Thesis and it is in play, constantly. The amount of time it takes people to ingest, sort and process information increases over time. Media outlets saw this in the ’70s and it continues to this day with the demise of the old media and rise of the newer media.

It is coupled with a number of other systemic effects: Moore’s Law, Metcalfe’s Law, Kurzweiler’s noting of life span extension, and some simple use of Gould’s dictum for scientific system applicability via re-use at different scales.

The centralized tenets of Progrissivism and Marxism , are failing faster and at a faster rate, and the rate of change for that failure is increasing. What used to take 700 years for an Empire took just a bit over 70 in the USSR, and the collapse of it in Eastern Europe saw scales go from 10 years to 10 months to 10 weeks to 10 days to 10 hours and then the USSR itself at the end of that cycle. The broad scale of Liberal Progressivism peaked in the 1990′s, more than 100 years after its introduction, we are now barely 11 years from that peak and its attempted resurgance is already failing after Bush tried to prop it up with Medicare part D and TARP, and now Obama with his foolishness. This is very close to the faster cycle of Communist implosion in Europe… this cycle can be sped up, but it cannot be slowed down.

ajacksonian on July 31, 2011 at 12:21 PM

Presuming this outlined deal passes and presuming the slowing of the spending it portends is real rather than sham like Harry Reid’s “let’s take credit for not fighting the Iraq and Afghan wars for the next ten years” (heck we could save a boodle for not continuing WWII for the last 70 years); this a testiment to legislative professionalism by Boehner and McConnel.

We had a measure that needed to pass but was opposed by the public and many members had taken positions that made it difficult for them to support. Like with all good deals, everyone gets their bottom line. The president gets past the election, GOP gets no taxes but some real spending restraint, Pelosi gets to say she protected entitlements and Reid dodged a situation where all incumbents would be targeted in the next election when he has 23 Democratic Senate seats up. We all knew the real battle is election 2012 and the GOP did not get blamed for a disaster that might have disrupted their effort to take the Senate and Presidency. Everyone met their posturing quota for the true believers benefit but the necessary work is done.

The amateur here was Obama who scotched the grand bargain by reaching too far on tax increases and made a cliff-hanger out of the same deal we are having today by scotching the agreement McConnel and Boehner had reached with Reid and Pelosi last weekend. Obama should thank the legislature for pulling his chestnuts out of the fire before the feces hit the fan and blew right in his face when he wants to appear to be a “bring us all together leader” for the campaign.

KW64 on July 31, 2011 at 12:24 PM

Chasdal,

Read some history before writing about history.
America is finished as an Empire.

angryed on July 31, 2011 at 11:58 AM

Unlike Reagan, the Tea Party doesn’t understand how to effectively govern and compromise in a democracy. Boehner had negotiated much larger deficit cuts but an inexperienced minority shot it down because of its delusions of grandeur. No empire ended because taxes were raised to pay for the cost of war.

bayam on July 31, 2011 at 12:28 PM

No empire ended because taxes were raised to pay for the cost of war.

bayam on July 31, 2011 at 12:28 PM

1. That’s not the main reason of the tax raises and you d@mn well know it.

2. Our empire’s economy is in such poor shape that the raises could be the straw that broke the camel’s back.

3. There is no realistic expectation of relief forthcoming from our supposed government.

Uncle Sams Nephew on July 31, 2011 at 12:39 PM

No empire ended because taxes were raised to pay for the cost of war.

bayam on July 31, 2011 at 12:28 PM

No, but many empires were more or less finished off by inflating their currency. Largely to pay for a military that was stretched way too thin.

Sound familiar?

http://mises.org/daily/3663

AUH2O on July 31, 2011 at 12:45 PM

GOP spelunks again.

Rightyismighty on July 31, 2011 at 12:54 PM

No empire ended because taxes were raised to pay for the cost of war.

bayam on July 31, 2011 at 12:28 PM

1. That’s not the main reason of the tax raises and you d@mn well know it.

My point was that it’s ok to compromise on a few Bush era tax cuts that are going to expire anyway in couple years in exchange for deep entitlement reform. There is zero chance that Dems will accept real entitlement reform without some higher taxes on the wealthy.

bayam on July 31, 2011 at 1:01 PM

Rumor has it that Zimbabwe will be putting together a bailout program for the U.S. Chad is holding out but they’ll be coming around soon as they are only now recovering from their bailout of the French Islamic Republic.

Annar on July 31, 2011 at 1:03 PM

Unlike Reagan, the Tea Party doesn’t understand how to effectively govern and compromise in a democracy. Boehner had negotiated much larger deficit cuts but an inexperienced minority shot it down because of its delusions of grandeur. No empire ended because taxes were raised to pay for the cost of war.

bayam on July 31, 2011 at 12:28 PM

Your analogy to Reagan is a bit flawed.

Reagan DID get us out of a deep recession. He did end the cold war. He did restore America’s independence overseas.

However – Reagan NEVER reduced the size of government – nor did he cut spending. He cuts rates of increased spending – but he never cut spending. In this manner – Ronald Reagan actually added to our current problems. Albeit – his contributions to the debt in no way match those of Bush and Obama. They don’t even come close.

We don’t need “Ronald Reagan” today – because – you’re right – Reagan was a “compromiser”.

We have $14Trillion in accumulated debt my friend. Think about that – and realize that only DEEP CUTS … RADICAL CUTS … HEROIC CUTS will have to be made to fix that.

You then have to ask if ANY GOP President will ever have the nuts to risk political oblivion to fix that.

I maintain – none will. Well – the “extremists” of our party would – Bachmann would – Palin would … but if they ever became President it’s very unlikely that GOP majorities in the house and Senate (were they to materialize) would suppr them.

So in fact – your “long game” view of this – is a fantasy. The fact is – those who have not the testicular fortitude to fight today – will not fight tomorrow. They are looking for “ideal ground” to fight on – that ideal ground will never avail itself.

HondaV65 on July 31, 2011 at 1:05 PM

My point was that it’s ok to compromise on a few Bush era tax cuts that are going to expire anyway in couple years in exchange for deep entitlement reform. There is zero chance that Dems will accept real entitlement reform without some higher taxes on the wealthy.

bayam on July 31, 2011 at 1:01 PM

Sure – let’s get our WORLD CLASS NEGOTIATORS – John Boehner and Mitch McConnell back in there to negotiate that one.

Their track record suggests that they’d do a bang up job of that! / rollseyes.

HondaV65 on July 31, 2011 at 1:08 PM

Reagan DID get us out of a deep recession. He did end the cold war. He did restore America’s independence overseas.

However – Reagan NEVER reduced the size of government – nor did he cut spending. He cuts rates of increased spending – but he never cut spending. In this manner – Ronald Reagan actually added to our current problems. Albeit – his contributions to the debt in no way match those of Bush and Obama. They don’t even come close.

We don’t need “Ronald Reagan” today – because – you’re right – Reagan was a “compromiser”.

HondaV65 on July 31, 2011 at 1:05 PM

Terrific. So even Ronny Reagan couldn’t be counted on to do what we need to be done today. That’s especially discomforting in light of the fact that a certain as-yet-undeclared candidate is being compared to him.

So the long and short of it is we’re screwed, then?

Uncle Sams Nephew on July 31, 2011 at 1:10 PM

IF this bill contains the CONTINUING RESOLUTIONS which ELIMINATES any further talk about ANY SPENDING then Boehner can take the rest of this congressional session off.

There will be no reason for a budget committee, no appropriations meetings, nothing! Just endless spending as directed by the White House!

In fact, there will be NOTHING to talk about except for their desires to be reelected!

Boehner will have reduced those pesky Tea Party people to less than one no vote for their entire time in this 2 year congressional session!

Freddy on July 31, 2011 at 1:10 PM

“But, but, we ought to shut down the govt & cause worldwide panic & lose in 2012 because we are principled!”
– some Tea Party types

itsnotaboutme on July 31, 2011 at 8:45 AM

It’s that the debit ceiling offers a unique opportunity to balance the budget, and it is an open question whether the damage of not increasing it is greater than the damage of continuing to overspend.

Count to 10 on July 31, 2011 at 8:49 AM

We have 1/2 of one branch of govt!
If we hold out for a perfect bill, we’ll never get one.
Deadline passes, world freaks out, GOP gets blame, Obama re-elected, GOP loses House.

itsnotaboutme on July 31, 2011 at 1:12 PM

So the long and short of it is we’re screwed, then?

Uncle Sams Nephew on July 31, 2011 at 1:10 PM

Do not believe the revisionist trolls. Reagan is in fact exactly what we need today. The revisionists have derided Reagan for decades as they have NEVER been able to dispute the FACT that tens of millions of jobs were created when Ronald was in office.

Now they try to pretend an accounting gimmick that Obama uses to pretend we have ‘created or saved’ a million or so jobs is somehow comparable.

Reagan started with an economy far worse than Obama. In fact, Obama’s economic ineptitude is recreating the stagflation that Jimmy Carter championed as President.

Freddy on July 31, 2011 at 1:18 PM

The amateur here was Obama who scotched the grand bargain by reaching too far on tax increases and made a cliff-hanger out of the same deal we are having today by scotching the agreement McConnell and Boehner had reached with Reid and Pelosi last weekend. Obama should thank the legislature for pulling his chestnuts out of the fire before the feces hit the fan and blew right in his face when he wants to appear to be a “bring us all together leader” for the campaign.

KW64 on July 31, 2011 at 12:24 PM

This.

rockmom on July 31, 2011 at 1:22 PM

We have 1/2 of one branch of govt!
If we hold out for a perfect bill, we’ll never get one…

itsnotaboutme on July 31, 2011 at 1:12 PM

If we always sign imperfect bills – we’ll will succeed at imperfection -as did the Soviets, the Greeks, the Ugandans, theZimbabweans….

Don L on July 31, 2011 at 1:28 PM

We have 1/2 of one branch of govt!
If we hold out for a perfect bill, we’ll never get one.
Deadline passes, world freaks out, GOP gets blame, Obama re-elected, GOP loses House.

itsnotaboutme on July 31, 2011 at 1:12 PM

Your argument falls flat in the shadow of a bill that guts defense spending while not enacting any REAL cuts overall, and provides cover for Obama to get reelected by solving his little debt ceiling problem.

fossten on July 31, 2011 at 2:05 PM

Regardless of how I feel about the policy, the very first thing that struck me about the politics of this was:

Boy, I certainly wouldn’t want to do this if Bill Clinton was POTUS. He would use all his skill to turn this into a club to use against the GOP in an election year.

I then realized that while BC definitely had the skills to pull it off, I seriously doubt that BHO has anywhere near the chops to do it successfully. He probably thinks he does, which means he is very likely to badly overplay his hand.

JohnGalt23 on July 31, 2011 at 2:59 PM

Your argument falls flat in the shadow of a bill that guts defense spending while not enacting any REAL cuts overall, and provides cover for Obama to get reelected by solving his little debt ceiling problem.

fossten on July 31, 2011 at 2:05 PM

Stop.

If every dime of the $2.4T came out of defense (which it doesn’t, I’m sad to say I have to add) over the next ten years, we would still have the largest military force in the world.

By far.

Such ridiculous hyperbole doesn’t help your argument.

JohnGalt23 on July 31, 2011 at 3:01 PM

We have 1/2 of one branch of govt!
If we hold out for a perfect bill, we’ll never get one…

itsnotaboutme on July 31, 2011 at 1:12 PM

If we always sign imperfect bills – we’ll will succeed at imperfection -as did the Soviets, the Greeks, the Ugandans, theZimbabweans….

Don L on July 31, 2011 at 1:28 PM

We were well positioned to win big in 2012 until you hyper-purist all-or-nothing folks started demanding perfection. With a Perry or Pawlenty as President & a conservative Senate, we could get everything you’re demanding now. But by demanding it now, you seem to be trying to ruin our chances of getting it eventually.

itsnotaboutme on July 31, 2011 at 5:24 PM

In the end, all BO cares about is a deal that allows him to run for president without the bothersome burden of being president.

MarkT on July 31, 2011 at 6:34 PM

In the end, all BO cares about is a deal that allows him to run for president without the bothersome burden of being president.

MarkT on July 31, 2011 at 6:34 PM

You get the impression also that he likes campaigning for president more than actually doing the work? It may also be that campaigning is all he knows.

slickwillie2001 on July 31, 2011 at 6:41 PM

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