I'm sure the world has been awaiting with bated breath for my usually spectacular analysis of the deficit reduction deal recently reached by Congress. So, in an effort to satisfy my adoring public (by which I mean the homeless man on Jackson who always claps when I walk by for some reason), I present the following analysis.
1. The Tea Party won a Pyrrhic victory. The Tea Party brought the debt debate to the foreground. Normally, these debt limit votes are perfunctory matters (except when some Senators who later become Presidents with the initials BHO write letters to the President telling them it would be immoral to raise the debt limit). Now, it is a big deal to pass this without some discussion of the insanity around federal spending. One of these days I need to sit down and write a post about unfunded mandates for you guys, but I digress. However, and this is key, A DEFICIT REDUCTION IS JUST A SMALLER INCREASE IN SPENDING.
2. The spending cuts, which aren't actually cuts in spending (see above) are pretty meaningless. The federal government operates on a budget that has automatic spending increases. As far as I can tell, these cuts don't even offset the automatic increases. Further, it doesn't meet the goals set by the S&P to preserve the United State's credit rating. I'm no fan of the S&P and I actually think a downgrade could be beneficial by raising interest rates and reducing the amount of cash the morons at the Fed have been flooding into the economy. However, it simply doesn't do anything to reduce the overall debt, and, in fact, pretty much preserves spending at record levels brought on by our Lord and Saviour Barack Obama.
3. The only cuts that matter are those made in 2011. One Congress cannot bind another to abide by its will absent a Constitutional Amendment. This means that once the 2012 elections occur, the cuts, which are heavily weighed over the next ten years rather than making any significant inroads this year, have no practical effect unless they are approved by the next Congress, assuming that one bothers to make a budget.
4. OH YEAH, THERE IS STILL NO BUDGET. I border on Guinness record levels of having the least responsible spending habits in the world and even I plan on how I'm going to pay my bills from month to month. We are approaching three state years that Congress has refused to pass a budget and that Democrats haven't even bothered to propose one (other that President Obama's joke of a budget that was voted down 97-0 and actually increased deficit spending, budget hawk that he is).
5. The budgeting process is broken like Sean Penn's sanity. As I said before, rather than looking at revenues and then programs and determining spending, the federal budget is based on expected automatic increases. Then, once those are put in, every starts planning on what they want to dump on top of it (i.e., "This sign telling you that the construction that hasn't accomplished anything on the Earhart Expressway was paid for by your tax dollars in the stimulus program because we wanted you to be fully clear and aware that we are wasting your money.") Most sane people either budget based on actual revenues in which they determine how much money they can use where (zero baseline budgeting) or file for bankruptcy. Only in the public sector is it acceptable to just spend thinking that you can print money to take care of it later. (Dear Democrats, devaluing the currency to pay the debt is not only idiotic, it borders on criminal.)
6. Tax raises are not only not off the table, they are being planned for. President Obama (who should have named his dog Cerberus, not that I'm implying he reigns over hell or anything) fully plans on letting the Bush tax cuts "expire" and has already said he will veto any legislation to extend them. Guess that whole "we all agree you shouldn't raise taxes during an economic downturn" thing went out the window. Of course, the President doesn't consider that raising taxes, they are just reverting to previous rates (which is going to be my defense when I ask the IRS to send me a refund as I would like to return to my previous taxes of 1997 when I worked minimum wage while in college). But beyond that, he has stated boldly that he intends to seek "revenue increases". I can only hope beyond hope that the President realizes that the government does not produce revenue and is planning on a bake sale of some sort. I'm not holding my breath.
I would say more, but frankly, I'm about to cry. I think the title of the bill was something like "Sound and Fury, Signifying Nothing" or SB BS 112.
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