The United States will not default on its debts, the NFL will
play this fall, and President Obama’s polls are sinking to a level
from which he may not recover.
But not all the news is good. Though the deal is
apparently done it isn’t yet enacted by Congress and it may risk
increasing the damage to national security already done by the
Obama administration.
At this writing — late Sunday evening — the deal has
been reached between Senate Minority Leader Mitch McConnell and
President Obama. McConnell spoke at about 8:30 p.m. on the Senate
floor, confirming that the framework of the deal was done and that
the Republican senators will meet Monday morning to — they hope —
confirm a deal. Democrats and House Republicans will also be
meeting, separately, on Monday to consider whether they’ll do the
same.
Obama came to the microphones about ten minutes after
McConnell’s announcement. As slippery as a greased weasel, Obama
announced a deal had been reached between congressional leaders of
both parties. But he never said he endorsed it. Senate sources told
me last night that Obama had committed to it and that McConnell
wouldn’t have gone on record without Obama’s concurrence. But
because “the liberals were going ballistic,” Obama didn’t have the
guts to publicly endorse the deal last night.
Because there won’t be time to pass the necessary
legislation by Tuesday, there will be a short-term debt ceiling
hike — perhaps for as short a time as two or three days — before
the big “trigger-unhappy” deal is enacted.
McConnell was in the driver’s seat for two reasons. First,
House Speaker John Boehner was double-crossed by Obama and rightly
walked away from negotiating with Obama two weeks ago, but his plan
to cut a deal with Nancy Pelosi and Harry Reid was — as I pointed
out at the time — bound to fail. When it did, and after Boehner’s
own attempt at a solo solution was blocked by House conservatives,
Boehner was so weakened that McConnell was forced to step in.
Second, because the “notoriously subdued” McConnell (as the
Washington Post characterized him yesterday) proved able
to flush the president out of the tall grass that he’s been hiding
in for months.
McConnell, as he said repeatedly this weekend, was
negotiating with the only person who can sign a bill into law. “If
we get a deal,” he said yesterday, “the president will be
supporting it.”
We know a lot about the deal, and part of that knowledge
is that neither Boehner’s plan nor Reid’s will be the
result.
Boehner 2.0 was a classic — and classically awful —
“if-then deal,” the kind of deal I
warned against three weeks ago. According to
the
CBO, Boehner 2.0 would have cut the
ridiculously small amount of $22 billion from the deficit in 2012.
If — and only if — future Congresses abided by it, the Boehner
bill would have cut only $915 billion off the federal deficit over
the next decade. (The debt ratings agencies had said that American
federal debt would have to be cut by at least $4 trillion over that
time to avoid a downgrade.) Boehner’s bill passed the House and was
quickly rejected by the Senate.
Reid’s bill was even worse and deceptively so. As I
wrote
last week, Obama would rather we default than forgo the tax
hikes he craves. So when he endorsed Reid’s bill and the media
proclaimed it to be without tax hikes, I had a moment’s
pause.
But only a moment’s, thanks to the indefatigable Sen.
Jeff Sessions (R-AL). Sessions’ staff analysis revealed
that Reid “deemed” two years of budgets in to being. (It’s
been 823 days since the Democratic Senate has passed a budget.)
Under Reid’s bill, current law was extended through 2013.
That meant the Bush-era tax cuts would expire and the
alternative minimum tax “fixes” — which prevents that law from
doing greater harm — wouldn’t be made. In short, Reid tried to
slip tax hikes costing about $3.8 trillion (over a decade) past us,
and Sessions caught him at it.
Reid had to pull his bill from certain defeat late
Saturday night after McConnell sent him a letter promising all 43
Republicans would vote against it. Reid went ahead with the vote
yesterday afternoon, and the bill — as expected — failed when
Reid didn’t muster enough votes to overcome the Republican
filibuster.
From what McConnell said Sunday morning, and reports
through the day, here’s what we know about the deal. It looks a lot
like the deal McConnell proposed three weeks ago.
There will be no default and, as McConnell told CNN’s
Gloria Borger yesterday, “There will be no tax increases in this
deal.” White House political advisor David Plouffe tried to laugh
this off on TV yesterday, saying that no one is talking about
hiking taxes in the next year and a half. Obama contradicted
Plouffe in his late Sunday statement, assuring the libs that he’d
be pressuring the new congressional committee created in the deal
to “balance” the spending cuts with tax hikes.
Obama will get the debt ceiling increase he wants, but not
all at once. It will be in three tranches, as McConnell proposed
three weeks ago: a $400 billion hike now, another $500 billion
later this year subject to a congressional resolution of
disapproval, and a third dose of about $1.5 trillion next year,
again subject to a vote of disapproval.
The increases come at a high price. Congress will have to
vote on a balanced budget amendment, but the debt ceiling increase
isn’t contingent on passing it and sending it to the states for
ratification. The increase is tied to the creation of a new
congressional joint committee tasked to create legislation to
accomplish about $3 trillion in budget cuts over ten years, with
about $900 billion enacted immediately. The $900 billion is about
the same — and probably as puny in the first year — as the
Boehner bill proposed.
The “supercommittee” will report by Thanksgiving in the
form of legislation that will be submitted to both houses of
Congress for a straight up-or-down vote.
McConnell stressed that the new committee, made up of six
Republicans and six Democrats — will have a “broad mandate” and
will be expected to deal with entitlement programs such as Social
Security and Medicare, tax reform and domestic spending. The
crucial element still being negotiated is what Congress will be
compelled by the law to do if the new committee either cannot agree
on spending cuts or if its report fails to pass either the House or
the Senate.
If the deal McConnell described becomes law, it will be
the biggest deal since the Obamacare disaster. When that bill was
signed, our eloquent vice president whispered sotto voce
to Obama that it was a “big f****** deal,” and it was. This can be
just as big. Whether it is depends on the “trigger” mechanism that
will force spending cuts if the new committee can’t agree, or if
its recommendations fail to pass.
The Republican members can be expected to insist on
entitlement reform and big cuts to other domestic programs. You
can’t get to the $3 trillion target without them. But the Democrats
are targeting defense spending and — as Sen. Chuck Schumer (D-NY)
said yesterday — will fight for tax hikes cloaked in the guise of
“tax reform.” The idea behind the trigger mechanism is to make the
forced spending cuts so painful to each side that neither will risk
them. This has to give conservatives pause.
According to several reports, the Democrats are making
this a trigger-unhappy bill for conservatives. At last word, the
cuts to be imposed if the committee fails to agree or if its
recommendations are voted down would be split 50-50 between defense
and domestic spending.
The Obama administration has already slashed defense
spending by about $400 billion, and the president demanded another
$400 billion be cut over the next ten years. None of the prior cuts
were — and none of the future ones will be — based on what we
need our military forces to be able to do. There’s no analysis of
the threat matrix on which these cuts are being made and planned.
The risk is too great: no further cuts can be made without that
analysis. The proper analysis, when and if it’s made, will draw a
bright red line below which defense cannot be cut. Republicans on
the new committee must keep that in mind. Whatever the result of
the “trigger mechanism” may be, it must not result in another major
cut in the defense budget.
The bottom line is that the deal, if it is made on the
terms McConnell outlined yesterday, is good if the new committee
results in massive cuts to federal spending without slashing
defense. It’s a deal worth making, but no conservative can rest
easy until we see what happens with the November report of the new
committee.
