The debt deal that President Obama announced last night will do some good things (assuming it passes). It will raise the debt limit by enough to guarantee that the US will not default on its debt in the next couple of years. That is a very good thing. It will also make some significant cuts to government spending. Depending how you measure them, the cuts amount to about 25 – 45% of the amount needed to balance the budget over 10 years.
And then there is the deficit commission. Since the politicians couldn’t agree on enough changes to balance the budget, they set up a commission to try to do it for them. On paper, the commission thing looks pretty good. It will be bipartisan, its recommendations will have to be voted on by both chambers, and no amendments will be able to be made. If Congress fails to enact the recommendations of the commission, a bunch of major cuts that neither party wants will kick in automatically as of this Thanksgiving.
Now, here is how this will probably play out. The commission will probably come up with a plan that is made up of about 80% spending cuts and 20% revenue increases. Republicans will immediately feign shock, and declare, “THIS IS NOT WHAT WE VOTED FOR!!!” They will go to Obama and say, “We are not going to vote for this.” Obama will say, “You have to, or those cuts that nobody wants, including big cuts to the defense department, will kick in.” Republicans will say, “They don’t have to. We could pass a new bill that cancels those automatic cuts without approving the commission’s recommendations.”
See, the dirty little secret here is that a new act of Congress always trumps an old act of Congress. So, when the Republicans don’t like the commission’s recommendations, they will demand another option. Democrats will not want the automatic cuts to occur either, so we will be right back to square one, probably ending up with another watered-down series of cuts.