And just like that, the great battle of the debt ceiling is done.
No, the bill hasn't officially passed through the Senate, or been signed by the President this morning - but the likelihood that it will be a law before three o'clock this afternoon is pretty high.
We're extremely glad this whole debacle is past, for now. Hopefully, our government can begin moving towards more jobs-related actions, since this bill did nothing on jobs or to help the unemployed. There are some signs that Democratic members of Congress already have begun to do so. The entire time this massive debt debate has been going on, the economy has continued to flicker in the background, like some Laurel & Hardy short where the problem seems obvious to everyone but them.
Still, the argument is basically over - but you may not have had the time to dig into the bill as some of us have. Before this subject gets filed away for a little while, we thought we'd give you a quick post-skirmish analysis. Think of this as a Cliff's Notes for the bill that was passed after all that fighting.
To start with, for those on the right who wanted cuts in entitlement programs? They didn't get them. For those on the left who wanted tax revenues from the wealthy, they didn't get what they wanted either.
After digging into the bill, it's fairly easy to see that the Republicans seem to have traded the appearance of winning the politics on this issue for the substance that the Democrats actually gained.
Yes - the bill still has a two-phase process. No, passing a Balanced Budget Amendment (BBA) isn't a requirement of either phase. Yes, there is a provision for attempting to pass a BBA (which is highly unlikely). Yes, both phases give the power to raise the debt ceiling to the President (even though that power constitutionally is the responsibility of Congress). Yes, both phases are subject to a "vote of disapproval" from the House & Senate, as Sen. McConnell initially proposed. No, neither vote of disapproval is expected to be anything other than a formality.
When all phases are complete, the debt ceiling will be raised to a minimum of $2.1 trillion, but no higher than $2.4 trillion.
After the bill is signed today, about $1 trillion in cuts will be locked in immediately - but the cuts are heavily back-loaded, with most of them not beginning until 2013 or 2014, and not ending until 2022. Only about $22 billion dollars in cuts will come from 2012 spending budgets - the same cuts that President Obama and Speaker Boehner began discussing about a month ago, and agreed on publicly over a week ago.
A committee will be formed, made up of twelve members, six from the House and six from the Senate. Each leader - Reid, Pelosi, Boehner, and McConnell - will choose three committee members. The committee will be tasked with finding $1.2 trillion in debt reduction savings from the Federal budget. There will almost certainly be massive closing of tax loopholes, which is allowed. Some form of tax increases are also almost certain.
If the committee doesn't reach it's goal in finding $1.2 trillion dollars in savings by this Thanksgiving, and Congress doesn't follow the committee's recommendation, then an automatic trigger kicks in, which automatically cuts $1.5 trillion from the budget, half of which would be from defense.
Programs for the poor and elderly, including Medicaid and Social Security, will be exempt from these cuts. Medicare payments to providers could be hit in a small way - but not to Medicare recipients.
In short, this agreement allows Congress to FINALLY get moving on the most important job they've all been avoiding so far, the single biggest thing that could solve both our debt problems and the economy - job creation.
Of course, Congress will get going on that right away... as soon as their FIVE WEEK summer vacation is over. After all their fine work in Washington, be sure to tell them how you feel about their job performance when you get the opportunity.
