After months of political brinksmanship over raising the federal debt ceiling, a package deal reached this weekend between the White House and Republican and Democratic Congressional leaders raises the ceiling by as much as $2.4 trillion (to as high as $16.7 trillion), but promises to cut the federal deficit by roughly that much over the next 10 years. Had a deal to raise the debt ceiling not been reached by Tuesday, the U.S. would have defaulted on its debt and suffered a lower credit rating with higher interest rates, the Obama administration said.
Spending over the next 10 years was capped by $917 billion under the deal, but the bulk of the deficit cuts — between $1.2 and $1.5 trillion — will need to be identified by a committee of 12 Congressional members picked by party leaders in the House and the Senate and then approved by Congress as a whole.
Wyoming’s three-member Congressional delegation voted for the bipartisan compromise, though not enthusiastically.
Rep. Cynthia Lummis, R-Wyo., said in a statement that the Budget Control Act of 2011 was “not perfect” but “takes steps to bring accountability to Washington” through future spending controls and smaller government.
Sen. Mike Enzi, R-Wyo., said he’s “proposed and voted for better plans, but this is a better choice than the federal government not being able to meet its financial obligations.” He said the deal “furthers our pursuit of a solution” to the U.S. debt.
Sen. John Barrasso, R-Wyo., said the agreement was a small victory over more wasteful Washington spending, and he accused Democrats of opposing deeper cuts. Barrasso called it “the first round of a 15-round fight on spending.”
The view that the debt deal was not big enough was echoed by Simpson and Erskine Bowles, a former White House Chief of Staff under Bill Clinton, who co-chaired a bi-partisan commission that looked at how to slash the national debt.
In a Wednesday op-ed in the New York Times titled “A Crisis Merely Postponed,” Simpson and Bowles said the debt deal was “an important first step toward fiscal sanity,” but “it isn’t a solution.”
Simpson and Bowles said the super committee needs to find far more savings than $1.2 trillion, saying the deficit needs to be cut by at least $4 trillion in the coming decade.
In a solo opinion piece for CNN, Simpson was even more critical of Congress’ failure to forge a broad, bipartisan consensus on stabilizing the debt despite the country being on “the brink of economic disaster.” He said legislators “found a way to muddle through the current debt crisis by promising to deal with the debt later.”
First up is the “The Joint Select Committee on Deficit Reduction,” which has until Nov. 23 to identify at least $1.2 trillion towards budget-balancing through either cutting spending or boosting revenue. The as-yet-to-be-appointed 12-member panel has been more commonly referred to as the “super committee.”
Speaking to the Tribune Wednesday, Simpson pessimistically predicted that Congressional leaders “will just put people on there to cause gridlock.” Personally, he suggested putting the entire so-called Senate “Gang of Six” on the panel, specifically saying he’d be sure to appoint Sen. Tom Coburn, R-Okla.
“If they (Congressional leaders) do that, I think there’s some hope,” he said. That six-member group of senators — three Democrats and three Republicans who served on the Simpson-Bowles commission — had been working on a broader bipartisan compromise, but failed to get enough support among their colleagues. If less than half of those senators end up on the committee, it will show the parties’ leadership “wants it to fail,” Simpson said.
One thing working in favor of agreement being reached on the cuts is that if the committee’s recommendations are not adopted by Congress, automatic, across-the-board cuts totaling $1.2 trillion kick in. They’re split between defense — near and dear to Republicans’ hearts — and domestic programs — a Democrat priority — in an effort to make compromise more appealing than gridlock.
“That (the trigger) is going to be a great irritant,” said Simpson.
However, the strongest impetus for a big deficit reduction, he predicted, will come from those who hold the United State’s debt and could lower the government’s credit rating.
Despite the deal, “at some point I think they’re going to, the bond people will lower their rating, and that’s going to sting,” Simpson said.
He warned that the U.S. isn’t that different than countries currently in debt crisises.
“Even though we’re not Greece and Portugal and Spain and Ireland and Italy — because of the hugeness of this economy — still, the percentages and the trend lines are the same,” Simpson said.
Also working in the super committee’s advantage is that a lot of groundwork has been laid.
“They can’t use the old thing, ‘we’re going to gather information.’ ... There’s nothing left to get,” Simpson said, noting the many options on the table: work from his commission, House Budget Chairman Paul Ryan, R-Min., House Speaker John Boehner, R-Ohio, Senate Majority Leader Harry Reid, D-Nev., Minority Leader Mitch McConnell, R-Kent., the Gang of Six and talks led by Vice President Joe Biden.
“You don’t need to sit and stare at your navel, you’ve got all the facts that you need,” Simpson said.
Wyoming’s former Senate powerhouse spoke with Biden on Sunday and was told a deal was close. An agreement was finalized later that night, passed by the House 269-161 on Monday, the Senate 74-26 on Tuesday and signed into law soon after by President Barack Obama.
Simpson said he and Bowles generally “just sat back and watched” as the debt debate raged, though “we did say often, ‘While you’re stumbling around in it, you might pick up the report.’ ”
The report is the 67-page document that the Simpson-Bowles commission came up with after studying the issue last year. Obama appointed the two men to chair the deficit commission, but the President, like many other politicians, did not support the report’s sweeping suggested changes to Social Security, Medicare, Medicaid, the tax structure and defense. Simpson encouraged folks to read it, pitching its readability.
The commission’s report is available at www.fiscalcommission.gov and www.momentoftruthproject.org.
“It’s in English. It uses terms like, ‘going broke,’ ‘shared sacrifice’ and ‘we’re all in this together’ — simple words,” Simpson said. “That’s what it is, and it won’t go away. It’s a stink bomb in the garden party.”
Some of the changes the 18-member commission recommended included gradually raising the full Social Security retirement age to 69, eliminating tax breaks and subsidies while lowering rates, changing Medicaid and Medicare cost-sharing rules to discourage overuse of care and reform for medical malpratice litigation.
He said Congress members from both parties will need to negotiate and compromise for the greater good of the country.
“A compromiser does not mean wimp,” Simpson said, saying someone who can’t compromise shouldn’t be in Congress.
During the interview, he compared the number of dollars in the debt (now $14.3 trillion) to the number of years in the estimated 13.7 billion year existence of the universe.
“Wrap your gourd around that,” he said.
In their New York Times column, Simpson and Bowles pointed to the name of their report: “The Moment of Truth.”
“Of all our prescriptions, the most pertinent today is the one alluded to in the title: we must act now,” they wrote. “If our government cannot address these terribly tough issues at a time when the public’s attention is fully on them, when will we ever be able to?”