LIKE ALL compromises, the debt-ceiling deal negotiated by President Obama and congressional leaders is not a win for either side. Rather, it’s a necessary piece of business that Democrats and Republicans alike should support, even if they wish the negotiations had gone in another direction. Yesterday evening, the bill seemed headed for passage, and appropriately so; a default on US debt would be devastating. And for all the negativity surrounding the negotiations and their outcome - a bill that raises the federal debt ceiling and promises $2.1 trillion in spending cuts - there are some positive aspects to the deal.
First, it delays any serious cuts for two years, to give the economy more time to recover, while also allowing enough borrowing room to guarantee that the debt ceiling won’t be breached until after the 2012 election, if ever.
Second, the cuts it makes are spread across federal programs - including defense, a longtime sacred cow - in a way that should mitigate their impacts on any individual priority.
Third, it sensibly assigns to a committee of 12 members of Congress, six from each party, the job of determining additional ways to reduce the long-term deficit, including changes to entitlement programs and the closing of tax loopholes to raise new revenues. If that group can’t agree, or the rest of Congress refuses to go along, automatic cuts will take place. The most significant of these involves a 2-percent cut to Medicare providers, but no change in Medicare benefits.
A different political equation might have yielded a better deal, one that includes new revenues. It would be much better to close the deficit by striking out unwarranted tax breaks for certain industries and closing loopholes that spare hedge-fund managers from the normal income-tax rate. That still might happen, when the committee of 12 settles down to business. As the recent negotiations wore on, it became clear that the Republican-led House simply would not allow such a plan to come to a vote.
Liberals are justified in their frustration, but that wouldn’t justify blocking this compromise - especially after they rightly condemned the efforts of Tea Party Republicans to hold the debt ceiling hostage to their demands. This bill meets the liberal test of preserving entitlement programs for the time being, while holding out for a larger agreement that combines benefit adjustments and new revenues. If such an agreement were to happen, it would resolve the long-term deficit that, in itself, throttles further investments in education, infrastructure, clean energy, and medical research.
Those investments are crucial to maintaining America’s economic standing in the world and American workers’ ability to compete in the global marketplace. Obama clearly understands that these progressive goals depend on fiscal stability; it’s why he’s willing to accept cuts to other programs, including some that liberals cherish.
This deal is no panacea, except in preventing a disastrous default. But it should be palatable to all sides, and, depending on the work of the committee of 12, could be a step forward for the United States.