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DFab420

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Mon Aug-01-11 01:08 PM
Original message

Edited on Mon Aug-01-11 01:09 PM by DFab420

http://tpmdc.talkingpointsmemo.com/2011/08/the-four-big-problems-with-and-four-silver-linings-around-the-debt-limit-deal.php?ref=fpa

Good vs Bad

Good:

* "Only about two percent of the nearly $3 trillion in savings outlined in this plan occur in the first year, and they don't all come from social programs. They also come from defense spending and other domestic programs. So its near-term impact on the economy will be pretty small. Of course, if the economy doesn't recover soon, the out year cuts will turn out to be very painful."

*"The good news is, the breakdown of this enforcement mechanism is fairly progressive, given that it's all cuts. It amounts mostly to a two percent cut for Medicare providers, and a whopping $500 billion in defense cuts over 10 years. Programs for the poor and for veterans and Social Security and Medicaid are all cordoned off"

*"When the new fiscal committee convenes, it will have free reign to look at both entitlement cuts and tax increases. The problem is that tax increases are scored by the Congressional Budget Office against "current law," which assumes the expiration of all the Bush tax cuts. So if the committee tries to end the tax cuts for the top earners, but make the rest of them permanent, it will score as a big tax cut and thus a budget buster. Not something a committee tasked with deficit reduction will want to touch. But that means the committee will have to look at other revenue raising options -- loopholes and expenditures that have nothing to do with the Bush tax cuts, say, or a new millionaire's tax bracket."

*This plan, in a convoluted way, guarantees that the country won't run out of borrowing authority again until the end of 2012. There will be other hostage crises between now and then, but none with consequences as grave as debt default.

Bad

*" The first part of the budget to take a hit -- and that will be hit for at least a few years into the future -- is the one part of the budget that hasn't grown particularly fast over the last decade. And it's also the part that matters the most for regular people: Health programs, education, clean energy, and transportation. It will be cut and capped, in a way that the Congressional Budget Office forecasts will amount to hundreds of billions of dollars less spending for these crucial programs."

* Late last year, President Obama struck another big deal with Congressional Republicans -- one that extended all of the Bush tax cuts for two years, but also included a payroll tax holiday for employees, and a one-year extension of unemployment insurance. As the Recovery Act has phased out, those concessions are now the only two things providing the economy with billions of dollars a month of extra juice -- juice that will run out at the end of 2011. Earlier in this debt limit fight, when Obama was aiming for a "grand bargain," he was also pushing to include a year long extension (and possibly a widening) of both of these measures. They didn't make the final cut.

* Defense is a real target here, as are Medicare providers, as opposed to Medicare beneficiaries. In the base deal, veterans and Social Security and Medicaid beneficiaries are walled off from immediate cuts. But at the end of the day, this is still an austerity plan

*Literally nothing about this plan will do anything to slow the growth of health care costs -- the true driver of the country's structural deficit.

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Thanks to TPM for breaking it down. Let's see if we can make actual sense of the bill..