Debt-Mania!

OK, so after weeks of wrangling, Congressional leaders and the White House came up with a plan to increase the federal debt ceiling. Well, actually, no. That’s not what they did. They came up with a plan for lots of other stuff that has only a tangential relationship to the debt ceiling that is designed to make everyone think that we’ll eventually be able to pay back the increased national debts we’ll accrue once we raise the ceiling. The law that raises the debt ceiling and the additional stuff Congress came up with did NOT have to happen at the same time. We could have raised the debt ceiling and dealt with spending through regular budget process, amendments to the tax code, a draw-down in the wars, reform of military contracting, or any number of other avenues but they all smack of common sense and we can’t be having any of THAT here in DC. Sheesh. Who would even suggest something so gauche.

There are all kinds of numbers being tossed around in this deal, trillions and trillions of dollars that we’re supposedly going to cut from US spending patterns. Those numbers, to my thinking, are fantasy. Fan. Tas. Sy. We’re talking about reducing spending by about $3 trillion over ten years. Not by next year. And the reason this is a fantasy is because there is no way to predict US spending needs for ten years. Any of a million things could happen to change the fiscal picture dramatically: a drought in the breadbasket, a series of hurricanes that tear up the whole East Coast, a massive terrorist attack, the zombie apocalypse. Anything could happen and the government will spend the money to repair it, plan or no plan. And they can do it in sneaky ways that are legal, public and acceptable but don’t look like regular spending. For example, during the Bush administration, the wars were paid for with a series of emergency supplemental appropriations bills. To the tune of $1 trillion dollars. This means that Congress went through the normal budget and appropriations process but did not plan for the true costs of the wars. Instead, they would write new spending bills every few months and pass them because not passing it was tantamount to pissing on the troops or letting Bin Laden win or kicking a kitten. And just in case you’re wondering, that $1 trillion in off-budget spending is a large part of the reason we went from a surplus to a deficit. That and tax cuts. And the loss of capital gains revenue after the tech bubble burst in the late 90s. But we had to spend the money for the wars so we did. No questions asked. It was not part of any ten-year plan but there it was. And that’s what could happen to this current set of ten-year plans.

So, what does this plan actually include? Well, for the first two years, there will be a total of $10 billion is spending cuts, 50% of which come out of the defense budget. I’m not sure of the details, but I believe that factors in troop drawdowns overseas.  Entitlements like Medicare are not touched. After that, a so-called super-committee of Members of Congress will be appointed to find another $1.2 billion in cuts and/or through some sort or revenue increase. They’re supposed to come up with a plan by Thanksgiving and the rest of Congress is supposed to pass it by Christmas. If they can’t, then it triggers Plan B which is an automatic formula for cutting $1.2 billion, 50% of which will come from the military.

Is the super-committee process going to work? Hard to say. This Congress has not demonstrated a great deal of aptitude for playing nicely in the sandbox so we can probably count on more political theatre as this process gets underway. But the probable dramatics and tantrums this process will incite isn’t my problem with the super-committee. No, my problem is that we already have a bi-partisan committee whose job is to deal with spending issues. Two of them, in fact. They’re called the House Committee on the Budget and the Senate Committee on the Budget. Many of the members of those committees have  years of experience and know a shitload about the federal budget. They have expert staff to advise them and they have access to the big brains at the Office of Management and Budget and the Congressional Budget Office to inform their work. Creating an elite super-committee made up of leadership, chairs of various committees and who knows who-all else seems redundant and potentially cuts some experts out of the process. It’s political porn: putting the biggest dicks on display for largely prurient reasons. This could be done through regular process with the committees that already exist.

Not that any of this has anything to do with the core issue which was that America’s line of credit was about to be exhausted and we needed to boost our credit limit. Which Congress did because not doing it would have sent the global financial markets into a state of higgeldy-piggeldy. And which Congress could have done without all the drama. In fact, they usually do it without all the drama. They do it once or twice a year and you never hear about it. Why this time turned into a massive pissing match is entirely a matter of timing and an attempt by the various parties to align themselves favorably for the 2012 elections. This set of policies will probably be the last big thing Congress does until 2013 because they don’t want to risk doing anything that will piss off possible voters before a big election. For the next 15 months, we can count of them alternately going home to campaign and coming back to DC where they will do nothing more substantial than naming post offices. In other words, they’ll abdicate many of the real duties of their jobs in order to spend a full year focusing on the deeply flawed process of keeping their jobs.

Ain’t America grand?