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  • The Debt Ceiling Deal From Hell

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     The Debt Ceiling Deal From Hell

    Is the debt ceiling deal supposed to be some sort of a cruel joke? Is this what the American people have been waiting months and months for? The "debt ceiling deal from hell" is a complete and total fraud. Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no "real" spending cuts will happen until after the 2012 election. The way the political game in Washington D.C. is played today, if you don't get something right now, you probably will never end up getting it. The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future. Meanwhile, this deal establishes a new "Super Congress" that threatens to fundamentally alter our political system (and not in a good way). The funny thing is that everyone is running around proclaiming that the Tea Party won this battle. That is a complete and total lie.

    So what about the $917 billion in "immediate" spending cuts that the Republicans are getting as part of this deal?

    Well, they aren't really spending cuts at all. Rather, they are spending caps. Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as "spending cuts".

    What is even sadder is that the $917 billion is spread over ten years and the vast majority of the "cuts" are in the latter years.

    For example, even if you consider these to be "spending cuts" (which they are not), the deal calls for only about $25 billion in "cuts" in 2012 and only about $47 billion in "cuts" in 2013.

    25 billion dollars is far less than one percent of the federal budget, so needless to say these "cuts" are not very impressive at all.

    Okay, so how about the second stage of the deal which will produce "spending cuts" of between 1.2 and 1.5 trillion dollars?

    Well, yes, these would actually be spending cuts and they would be spread over 10 years.

    Near the end of the year, the new "Super Congress" (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.

    If the recommendations of the "Super Congress" are not implemented, than "automatic" spending cuts of $1.2 trillion will go into effect over the next 10 years.

    However, there are some very important things to remember about these "spending cuts".

    First of all, none of these "automatic" spending cuts would even go into effect until 2013. The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.

    As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason....

    By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

    As I have written about so many times before, the U.S. national debt is completely and totally out of control. This was supposed to be the moment when at least some members of Congress were finally going to get serious about our exploding debt. Unfortunately, our politicians have sold us down the river once again.

    Even if the best case scenario happens (which it never does) and Congress sticks to this deal for the full ten years (which is about as likely as hell freezing over), the "savings" that this deal would produce are quite pathetic as Peter Schiff recently explained....

    The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

    Keep in mind that Congress can change this deal whenever it wants.

    So nobody should get excited about these "spending cuts". After all, when was the last time that "future spending cuts" actually materialized in Washington?

    The reality is that neither political party seems to want to do much to cut government spending.

    So the band will play on and the can will get kicked even farther down the road.

    When Obama was inaugurated, the U.S. national debt was $10,626,877,048,913.08.

    Today, it is $14,342,358,440,969.10.

    But what this "debt ceiling deal" will do is it will give the congressional leadership of both parties much more power.

    The new "Super Congress" that this deal establishes will be granted "extraordinary new powers" that regular members of Congress do not possess.

    For example, The Huffington Post says that any new legislation produced by the "Super Congress" will not be able to be filibustered or amended....

    Under the reported framework, legislation the new congressional committee writes would be fast-tracked through Congress and could not be filibustered or amended.

    So who will be a part of the "Super Congress"?

    The members will be chosen by the leadership of both parties.

    So anyone that is not part of the "establishment" is not likely to be included.

    The following is what U.S. Representative Ron Paul had to say about this new "Super Congress"....

    "Nothing more than a way to disenfranchise the majority of Congress by denying them the chance for meaningful participation in the crucial areas of entitlement and tax reform. It cedes power to draft legislation to a special commission, hand-picked by the House and Senate leadership."

    It is this new "Super Congress" that will decide what will be in the package of "spending cuts" that will be voted on by the end of the year.

    Regular members of Congress will be frozen out of the process.

    On December 23rd, Congress will be required to vote up or down on the spending cuts proposed by the "Super Congress". Regular members of Congress will not be allowed to amend the legislation in any way, and no filibusters will be permitted.

    Does that sound very "American" to you?

    The more that one examines this "debt ceiling deal", the worse it looks.

    Meanwhile, many Democrats are running around and acting as if their lunch money was just stolen.

    For example, the following is what Politico is reporting that U.S. Representative Mike Doyle said about this deal....

    “We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

    Democratic congressman Emanuel Cleaver was even more dramatic when he proclaimed that this deal "looks like a Satan sandwich".

    Well, this deal is a total nightmare, but not for the reasons that Cleaver is suggesting.

    This deal opens the door for more rampant deficit spending, and nearly all of the "spending cuts" are put off until after the 2012 election.

    Basically, the Republicans got taken out behind the woodshed and beaten to a pulp on this one. Any Republican that is trying to proclaim that the debt ceiling deal is a "great victory" is a complete moron.

    But in the end, it really does not matter which political party gets a "victory" out of all this. What matters is that our federal government is still steamrolling toward a date with financial oblivion.

    If this is the best that our politicians can come up with, we are absolutely doomed.


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