Last week, the federal government utterly failed to produce the debt ceiling deal that the American people deserve. Instead, Republicans and Democrats came together, realized that real economic reforms would require politically difficult compromises, and agreed to do nothing except promise to work on it later.
To excuse their failure, both sides made up scary claims about a coming “default” when, in fact, simple math shows that default was impossible. I joined 65 other House Republicans and 95 Democrats in voting “no.”
In the end, the deal had the impact of a rounding error on our out-of-control budget. The federal government takes in around $6 billion a day and spends $10 billion. That means $4 billion per day is borrowed. Total enforceable cuts in this deal were $21 billion for all of next year. That’s less than one penny of cuts for every dollar of government spending — a small blip on a spending graph that slopes upward into perpetuity.
The rest of the “cuts” in the deal — the ones the politicians bragged about — are promises to pass laws that slow the growth of spending in the future. Promises to pass smaller spending increases are not cuts, and, even if they were, Washington’s reputation for keeping promises is not good.
On both sides of the aisle, politicians claimed that they took a bad deal because the alternative was a doomsday “default” that would sink the American economy. But the math does not support their claims. The Treasury takes in about $180 billion in receipts and pays out about $20 billion in loan interest each month. Default on our debt obligations was never more than a scare tactic. As Yale Law Professor Bruce Ackerman noted last week, “There is zero — and I mean zero — chance that the United States will default on its debt even under the worst-case scenario.”
A much better deal was possible, but most politicians were unwilling to make real compromises. Republicans needed to accept practical reductions in military spending and the elimination of special tax breaks and subsidies for people with political connections. Democrats needed to accept reasonable reforms to Social Security, Medicare, and Medicaid that would keep these programs viable and preserve most benefits. These are necessary, difficult compromises. If we wait until we run out of money and our creditors stop lending to us, the cuts will be more abrupt, larger, and more devastating for the most vulnerable Americans.
Read the rest at Michigan Live.
Wes Messamore,
Editor in Chief, THL
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