The deadline for the deficit reduction panel to produce a plan is fast approaching. Little progress has been made toward reaching a deal, and lawmakers are pessimistic about any future progress in the committee. This means only one thing…get ready for round two of the debt ceiling debates, America. Last summer’s debt ceiling crisis was not only an embarrassment, but also detrimental to our country’s economic health. The hyper-partisanship surrounding the debates and the perceived congressional inaction toward reducing the deficit as a result, convinced the economic community, specifically the ratings agencies, that U.S. debt was no longer AAA worthy, and the U.S. credit was downgraded for the first time in history.
The blame for the downgrade should not be placed on our debt, or even the recovering economy; it should be placed solely on the irresponsibility of the Republican Party. Republicans, by refusing to raise the debt ceiling (which has been done 87 times by both Republican and Democrats without much resistance) created a completely unnecessary economic crisis. They placed the U.S. economy in peril and used it as a hostage in an attempt to force through draconian spending cuts to important and widely supported entitlement programs. Democrats rejected the GOP plan, arguing correctly that it was fundamentally unfair to the American middle class. When no agreement on a major deficit reduction plan could be reached between the two parties, Congress voted to punt on the issue of deficit reduction and delayed the final solution.
Instead of substantially reducing the deficit this past summer, Congress passed a bill that created a bipartisan 12-member committee tasked with approving a deficit reduction plan to be voted on by Congress at the end of this year. If the committee fails to meet the November 23 deadline or match the $1.2 trillion in required deficit reduction, $1.2 trillion in automatic cuts to military and entitlement spending will take effect. The threat of these automatic cuts, lawmakers argued, would serve as motivation to the panel members. Republicans don’t like cutting military spending and Democrats don’t like cutting entitlement spending. Therefore, a failure to meet the deadline should be an equal loss for both political parties. But this is not the case.
Even with the deadline fast approaching, Republicans and Democrats are having difficulty agreeing on a reduction plan. Democrats introduced a balanced plan that reduces the deficit by $2 trillion, with the deficit reduction divided evenly between spending cuts and tax increases. Republicans, despite their explicit commitment to reducing the deficit, rejected the Democratic plan, and instead presented a plan that was, in comparison, inadequate and fundamentally unbalanced. The plan cuts the deficit by only $1.2 trillion. It also permanently reduces the tax rate on the top income brackets from 35 percent to 28 percent, while cutting $750 billion from important domestic spending programs that benefit the middle class. Republicans – who claim to care the most about reducing the deficit – rejected the balanced Democratic plan and instead produced a plan that reduced the deficit by a far smaller amount.
In addition to Republican hypocrisy concerning deficit reduction, these automatic cuts to military and domestic spending would give the Democratic Party an additional line of attack against the GOP. The impact of cuts to domestic spending programs will be felt much more by the U.S. population than cuts to military spending. Domestic programs not protected from the automatic cuts include public funding for nursing homes, payments to doctors and subsidies to insurance companies that offer an alternative to Medicare. Millions of Americans rely on these public services. Recent polls have shown that the majority of Americans support cuts to defense spending and a minority of Americans support drastic cuts to domestic spending. It is also worth noting that on average, the Americans favor job creation over deficit reduction. A recent Pew Research conducted in September showed that 43 percent of Americans believe that job creation is the most important issue. 22 percent of those polled believed that deficit reduction was the most important.
Thus, if the debt panel fails and the automatic cuts are enacted, the Democratic Party should be ready to place the blame squarely on the Republican Party, right where it belongs.
Contact Noah Merksamer at [email protected]