Tuesday, August 2, 2011

Report on a conversation with White House staff on the "Debt Ceiling Deal"

I had an opportunity Monday afternoon to participate in a conference call with one of the White House staff in which the “Debt Ceiling Deal” was described in some detail. Here’s what we learned:

Most important the deal raises the debt ceiling far enough that we won’t have to revisit the issue until after January 1, 2013.

Budget cuts totaling $1 trillion of which $350 billion come from Defense and $650 billion from discretionary spending will be phased in over 10 years and are backend loaded so little happens now. There will be NO CUTS to Medicare, Social Security, Medicaid, Pell Grants or other social programs that we have fought so hard to protect.

There will be a Super Committee of 12 made up of three members of each party from each house of Congress who will be charged with coming up with another $1.5 trillion in cuts to be spread over 10 years, there will be a firewall around social programs. Whatever plan 7 or more can agree on will be submitted to both houses of Congress for an up or down vote, no filibusters, no amendments. If both houses pass it then the President has an opportunity to sign it or veto it.

If the Super Committee fails to develop a plan that 7 or more members can agree upon or it fails to be passed by either house or it is vetoed by the President by January 1, 2013 then the hammer comes down and there will be $500 billion cut from Defense and $500 billion cut from discretionary spending and again there will be a firewall around social programs except that there will be a requirement to reduce Medicare fees to doctors by 2%.

I was immediately concerned because we all know that finding a doctor who takes Medicare is often difficult now and cutting fees further is certain to make that tougher. The response was that it isn’t necessary to pay less for a service, the Medicare folks could choose to offer incentives to be more efficient so that spending goes down because fewer unnecessary tests were done or some other cost saving measure could fulfill the requirement.

Another person on the call asked about whether the Defense spending cuts would come of out the VA budget or in other ways hurt veterans and the answer was that Defense cuts were focused on the Pentagon, referring to weapons and deployments etc.

There are a few points to remember when determining how you feel about the “Deal”. First, the reality is it should have been clean of all encumbrances but since the R’s decided to play chicken with our jobs and families we weren’t going to get that. Second, the “Deal” means we don’t have to revisit the issue going into the 2012 election so they can’t use the debt ceiling against again by holding it hostage in an election year. Finally, we got a minimum of $850 billion in Defense cuts over 10 years and didn’t kill any of our most precious social programs to do it. The TEA Party R’s wanted $1.2 trillion in cuts right away and they wanted to take them from Pell Grants, Medicare and Social Security but that isn’t going to happen.

I’m sure some will claim that we didn’t raise taxes on the rich but that’s going to happen anyway because the extended Bush tax cuts expire January 1, 2013. No we didn’t close corporate tax loopholes but remember that what should have happened was a clean bill, there wouldn’t have been any tax increases as part of that, there wouldn’t have been any closing of corporate tax loopholes either. Those things weren’t part of what we really wanted so there’s no reason to cry about not having them. The R's didn't get what they wanted and we didn't lose anything we worried about so in my book we won.

Now let’s go out and elect some Democrats so we can regain control of the House and return Barack Obama to the White House then we can toss this crap in the bonfire, fix the tax code and save our country from the bat shit crazies in the TEA Party and the Koch Bros.

Please pass this on.

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