As of August 2nd, the political powers that be finally worked out a compromise that was able to pass Congress and get signed into law by the President. It was certainly a painstaking process, and not just for the lawmakers, the general voting public felt the strain and frustration too. The last three weeks of political anguish on the part of citizens and politicians has amounted to this new law, and no one seems particularly pleased about it. So what does this bill do and should anyone be happy about it?
The new law works out spending reform in a two-step process. The first step is an immediate $900 billion reduction in discretionary spending spread out over 10 years. (Discretionary spending is the spending that Congress has to create a budget for each year. That includes spending for defense and education. That does not include Social Security and Medicare. They are considered mandatory spending and are dealt with separately. Discretionary spending in 2010 amounted to $1.3 trillion which accounted for 38% of total government spending.)
Step one is already set and can’t change; Step two has some wiggle room. For the second step of spending reform Congress must put together a committee of 12 members: 3 Republicans and 3 Democrats from the House and 3 Republicans and 3 Democrats from the Senate. This committee is tasked with figuring out about 1.6 trillion dollars in additional savings. Nothing is off the table for the committee. They can consider tax reform and entitlement reform. At least 7 of the 12 members must agree on the savings plan for the plan to be moved onto Congress. Congress must then vote on the proposal. If they vote to reject it, or if the committee fails to create a plan, automatic cuts of 1.2 trillion dollars in discretionary spending occur. (Also to be spread out over 10 years.) This cut will also be divided equally between military spending and non-military spending. The committee must come up with a proposal by November 23 and Congress must vote on it by December 23.
On top of all that, the law mandates spending caps of about 1.04 trillion dollars in discretionary spending for every year of the next 10 years. Also Congress must vote on a Balanced Budget Amendment, however the specifics on what exactly that amendment would look like are pretty slim.
So who won? As far as the actual bill goes, I think Republicans got more of what they wanted, despite what some Tea Party Republicans are saying. First and foremost the Republicans in the House didn't allow Obama to get his "clean" increase in the debt ceiling that he wanted. The fact that the debt ceiling increase was connected to spending reform should be considered a victory for Republicans. The Republicans were able to prevent tax increases in the first round of deficit reduction, which was their pledge from the beginning. Crucially, this law stands in stark contrast to the bailout bill Obama was able to secure at the beginning of his term. The mindset of Congress seems to have changed, albeit only slightly. This change is the result of the appearance of the fiscally conservative Tea Partiers.
Meanwhile the Democrats gave up increases in taxes and were forced to allow the spending cuts that they had fought against through. And all this happened while the GOP only controlled one half of one branch of the federal government.
That's not to say that this is the greatest deal since 99-cent Tuesdays at the bowling alley. Despite all the cuts and potential cuts, projections suggest that the total deficit will still increase by at least $7 trillion over the next ten years. With that in mind one can understand why some Republicans still voted no on the compromise. They feel the law simply didn’t do enough. And frankly no one, on the right or the left, should be satisfied with this level of spending reform. The government is still way too far in the red and it’s still sink farther in.
All that being said, step two of spending reform is where the battle lies. Both Republican and Democratic leaders must carefully choose their representatives for this 12-person committee. Neither side wants to stalemate the whole process but neither side wants to give up too much ground either. Both Republicans and Democrats want to avoid the automatic cuts. It is a battle of ideologies in Washington. There are those who wish to continue to increase the scope and authority of government and those who want to see government shrink. This new law is certainly a victory for small government. But it was only a small victory; when round two kicks off in a couple weeks the real battle will just be beginning.
Tyler Holmes
Proverbs 14:15
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