By Miriam Raftery
August 1, 2011 (Washington D.C.) – President Barack Obama and Congressional leaders from both parties reached a last-minute deal last night aimed at forestalling the U.S. from defaulting on the national debt by tomorrow’s deadline. But the agreement hinges on getting both sides of Congress to pass it swiftly.
Who wins, who loses? The most detailed and impartial analysis we’ve seen, including an easy-to-read chart, is in the Washington Post article titled “Who Got What?” http://www.washingtonpost.com/politics/who-got-what/2011/07/31/gIQAZDDUm...
The good news is the default may be prevented, albeit in a deal that forced both sides to make big concessions. The bad news is the amount of debt reduction short term is only $1 trillion, so Moody’s says the U.S. credit rating will likely still be lowered: http://thehill.com/blogs/on-the-money/801-economy/174447-moodys-neither-.... There are two options to reduce the debt more: cut spending or raise revenues.
Democrats have opposed deep cuts in social programs while Republicans have balked at cuts in defense---two of the biggest budget expense categories. Republicans have fought all efforts to raise revenues, such as closing tax loopholes or raising taxes, on corporations or individuals.
The GOP has also pushed for a balanced budget amendment. But even if passed it would still require approval by two-thirds of all states, a process that would take years at best and set the stage for battlefields in legislatures across the country. It’s been many decades since any constitutional amendment was approved nationally; even the Equal Rights Amendment to grant women constitutional equality to men failed to win the required two-thirds approval from the states.
The deal now proposed would raise the debt ceiling short term and cut $1 trillion (ironically, $3 trillion less than the $4 trillion proposal the President agreed to previously), while setting up a bipartisan committee with representatives from both Houses of Congress to decide how to further reduce the debt long term through either spending cuts, revenue increases, or a combination of both.
The Committee would be granted extraordinary powers and the full Congress would be presented with only two choices: accept the Committee’s recommendations in full, or vote down the entire package. Supporters say it’s the only way to break the bottleneck in Congress to achieve meaningful reforms. Opponents contend it creates a “Super Congress” with new powers not granted in the Constitution.