Is There Any Good News in the Deal on Debt?

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The Debt Deal struck a couple of weeks ago did (perhaps) avert a national default; the perhaps is because our constitution provides that the US will allocate funds to cover obligations, so it is not entirely clear that Obama had to come to an agreement with right-wing Congress members at all.  But as he has shown us many times, Obama is an agreer to the opposition, not a negotiator, and not an emphatic leader.

As a result, the final outcome of the debt deal, along with announcements and legislation passed in concert, had something for everyone on the right:  smaller government with less active oversight in departments that protect environment and consumers; less money for jobs, employment, training, and unemployment benefits; deep cuts to education at all levels (followed by the announcement that schools no longer have to test for student competence at all); and continued permission for right-wing religionists to obstruct health care for women.

But, surprisingly, some good news was included in this otherwise depressingly predictable outcome.  I refer to the cuts in military expenditures.  Most important is the recognition that what the military does  — its entire program of activities, in fact – is “discretionary,” a categorization that those on the right have labored mightily, and successfully, to avoid until this moment, pretending instead that discretionary spending on social services is what drives government expenditures.

In the debt deal itself, some $350 billion of the $917 billion total to be cut in Federal Government Discretionary Spending would come from defense and other security programs.  These programs account for more than half of all discretionary spending.

Republicans have never before agreed to recognize military monies as ‘discretionary’ — when they refer to “discretionary programs” they mean exclusively those social and oversight programs that serve people, including food inspections, mine and other workplace inspections, and any other rules and regulations constituting “government interference” in business such as minimum wage laws.

The military has always been sacrosanct.  While the right has, reluctantly over time, been persuaded to agree to oversight in employment, environment (although a recent Tea Party proposal was to forbid the government to add ANY new species to the Endangered List), and consumer goods, the military has maintained an off-limits aura that has extended in previous years to select aspects of war funding actually not being included in the budget at all, as with the War on Terror in Iraq.

So recognizing military expenditures as discretionary, to begin with, and then including that apportionment in the category of discretionary funding to be cut, is both surprising and a very, very deep win for those concerned with improving lives rather than ending them.

Moreover, this will be the first time in recent years that military spending will have been acknowledged to be responsible for fiscal damage.  Again, conservative rhetoric places fiscal blame squarely on welfare mothers and others who “fail to work”….who collectively consume less than 1/1,000 of the monies enjoyed by military contractors as well as directly spent on US armed services…in peace-time.

Finally, the debt deal contains a clause providing even better news:

If the committee to find additional savings cannot agree on at least $1.2 trillion in savings, or if Congress rejects its findings, automatic spending cuts totaling that amount would kick in starting in 2013….and those cuts would fall equally on domestic and military programs.

Medicare would face automatic cuts, but they would be capped and fall entirely on medical providers, while Social Security, Medicaid, federal employee pay, and benefits for veterans and the poor would be exempt.

Since this bipartisan committee has now been composed of people at the extremes of their parties’ views, it is a rather likely scenario that Congress will once again be unable to agree on further spending cuts.

In that case, rather than having about 38% of the cuts go to military spending, fully 50% of the cuts would go to military spending in the case that the committee is deadlocked on a variety of plausible thorny disagreements.  And, several important areas of domestic expenditures will be spending-cut-exempt.

To me, this is important and wonderful news, and while this is possibly the only silver lining in this debt-deal cloud, it is a cause for celebration among those opposing cuts in domestic programs so that the military can continue to grow.

Janet Spitz, PhD                                                                                                                             School of Business                                                                                                                            College of St. Rose



We are pleased to welcome Dr. Spitz as a new contributor to our blog-site!   She holds BA and MBA degrees from Cornell University and a PhD degree from Stanford University’s Graduate School of Business.  We are looking forward to more of insights from her in the future!

ARC, JMH – 8/24/11

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One Response to Is There Any Good News in the Deal on Debt?

  1. IFKaramazov says:

    This puts the best face on the deal that I’ve seen yet (at least, the best face that isn’t innately designed to obscure distasteful realities). In this regard, it does at least get the Republicans to take a step back, even if it doesn’t count as a victory for any conventionally “Democratic” principles.

    The main problem I have with the debt deal is that on paper it doesn’t sound like the worst deal in history. It’s not good, strictly speaking, but it’s not going to bring down the republic. On the other hand, once you look at the people who were selected to represent the Democratic Party in the “supercongress,” it begins to look like the paper deal won’t be so harmless in practice.

    I have doubts that the supercongress will be gridlocked 6-6 on every issue, every vote. By the time the equal cuts provision goes into effect (if it does), I would be willing to bet the social safety net will have taken disproportionately more damage than the Pentagon budget. I could be wrong, of course, but it seems like a roundabout way of letting entitlements fall on the sword without having to hold the president or the party as a whole responsible.

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