President Obama wanted three things from the debt-ceiling fight: trillions in new borrowing authority, status quo on spending and no more drama before his shot at re-election. He got everything.
Republicans in control of the House could have refused to raise the debt ceiling, but their leaders were afraid. They believed failing to raise the debt ceiling would lead to a default and a disastrous reduction in America’s credit rating.
GOP leaders claim they cut the best deal possible in a divided government.
“This is very important for our fiscal future, but it’s also important for the fact that our economy needs to get going,” House Speaker John A. Boehner said on Monday. “Beginning to take steps toward fixing our fiscal problems will, in fact, provide more confidence for employers in America.” Senate Minority Leader Mitch McConnell said on Sunday night that the deal “will ensure significant cuts in Washington spending.”
That’s an exaggeration. The bill would cut a minuscule $7 billion in 2012 and $3 billion total in 2013 - the only enforceable years. Meanwhile, the nation will continue to borrow at a rate of $100 billion a month.
The second tranche of “cuts” will be left up to a new bipartisan committee tasked with finding up to $1.5 trillion in savings. There are a bunch of gimmicks involved, but essentially we’re supposed to believe that even though Congress can’t cut a days’ worth of spending now, it’s somehow going to have the fortitude to reduce spending by far greater amounts down the road.
