Congress might pass a debt deal this week that would raise the debt ceiling into 2013 and reduce government spending by $2.5 trillion. After all the debate over who would be affected—or not—what does the final policy scoreboard say?
In short, it’s a rout of the lower and middle classes by the wealthiest Americans. Since the deal relies entirely on spending cuts with no revenues—don’t believe the White House spin that revenues are possible, because that would require Republicans to suddenly desire them—the wealthy escape any sacrifice since very few of them rely on the government services that will be cut.
Rather, as Brookings Institution senior fellow William G. Gale writes, “Low- and middle-class households have seen stagnating or declining earnings over the past few decades, and they have been hit hard in the Great Recession by the housing market collapse and the job market collapse. Now, they are being asked to shoulder—via spending reductions—all of the fiscal reduction agreed to so far.” (Yes, that Brookings Institution).
How specific cuts will be determined, and who exactly is affected, is still hard to know. The deal truly “kicks the can down the road,” in the overused Washington parlance. The $917 billion in “immediate” cuts are not really immediate, nor enumerated. Federal spending will operate under caps over the next ten years equal to $917 billion less than what was projected, but the exact areas of reduction are unknown and obviously depend quite a bit on political outcomes. The caps are relatively modest until 2013, and a Republican Congress with a budget proposal from President Rick Perry would make much a different decision about where to cut than would Obama, Pelosi and Reid.
Then, $1.5 trillion in additional cuts will be determined by a so-called super committee of six Democrats and six Republicans. Entitlement programs like Medicare, Medicaid and Social Security are subject to “across-the-board” cuts here, and if no agreement is reached by November 23, a “trigger” will be pulled, with the gun aimed squarely at senior citizens and the Pentagon.
So there are a lot of permutations for these cuts—but make no mistake about who is exposed, and who isn’t. Cuts are guaranteed, revenue is not. Here’s a quick rundown of the larger bill: