Acting almost literally at the final hour, the Senate on Tuesday matched the action taken by the House on Monday and passed legislation that raises the debt ceiling of the federal government, allowing the Treasury to pay the nation’s bills and avoiding default.
Minutes after the Senate approved the bill, President Obama signed it into law, authorizing trillions of dollars in spending cuts while leaving tax cuts for the wealthy untouched, permanently enshrined as America enters an age of austerity.
The New York Times reports…
President Obama signed into law on Tuesday legislation raising the government’s debt ceiling and cutting trillions of dollars in spending, finally ending a fractious partisan battle just hours before the government’s borrowing authority was set to run out.
The Senate passed the bill, 74 to 26, earlier on Tuesday after a short debate devoid of the oratorical passion that had echoed through both chambers of Congress for weeks.
A few minutes after the vote, President Obama excoriated his Republican opposition for what he called a manufactured crisis that could have been avoided. “Voters may have chosen divided government,” he said, “but they sure didn’t vote for dysfunctional government.”
The compromise, which the House passed on Monday, has been decried by Democrats as being tilted too heavily toward the priorities of Republicans, mainly because it does not raise any new taxes as it reduces budget deficits by at least $2.1 trillion in the next 10 years. But it attracted many of their votes, if only because the many months of standoff had brought the country perilously close to default. And rather than soothing already nervous markets, the final passage sent stocks lower.
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Senator Mitch McConnell of Kentucky, the minority leader, who played a central role in the ultimate compromise, said his party’s goal was “to get as much spending cuts as we could from a government we didn’t control.”“It may have been messy,” he said. “It may have appeared to some that their government wasn’t working, but in fact the opposite was true.” Legislating, he added, “was never meant to be pretty.”
The final vote of 74-26 was not even as close as that wide margin appears, with many of the Republican lawmakers only opposing the measure after passage was assured in a bid to protect their political interests from the “Tea Party” base of the GOP that campaigned against any debt deal.
Six Democrats and one Independent voted against the deal, led by Sen. Bernie Sanders of Vermont, the most vocal opponent in the Senate against what most progressives labeled a concession to conservatives and an embrace of austerity.
Click here for the full Senate roll call vote.
While Republicans could face a rebellion within their base over the debt deal despite what many observers categorize as a sweeping victory on policy, President Obama and Democrats are already dealing with open hostility over the specifics of the “grand bargain” worked out between the White House and congressional leaders.
One Democratic lawmaker famously called the legislation that was approved by the Senate on Tuesday as a “sugar-coated satan sandwich”; ”If you lift the bun, you will not like what you see.”
And despite a hard sell by the White House , with Obama advisers arguing that progressives ought to be “comfortable” with the debt deal, the facts of the compromise the president struck with Republicans in Congress are as hard to swallow as, well, that “satan sandwich.”
Besides serious unanswered questions about whether the ultimate target of the debt deal will be “entitlements” like Medicare and Social Security (more on that tomorrow), the list of cuts that we do know are certainly bad enough.
With GOP demands for offsetting cuts being matched with an equally strident insistence on no new “revenues” (taxes) or even the expiration of previous tax cuts, the only way to balance the budget and find the necessary savings are in scores of government programs and government spending aimed at ordinary Americans. As The Nation reports, students, veterans, the unemployed, the poor and low-income families will bear the brunt of this Washington’s artificially-imposed austerity.
The recession of 2008 had a definitively greater impact on low-income and middle-class Americans, forcing them to deal with cratering housing prices, low wages, a spike in unemployment, etc. Now, as one financial expert points out, “they are being asked to shoulder—via spending reductions—all of the fiscal reduction agreed to so far.”
And could the pain felt by ordinary Americans be even worse when the details of this debt “bargain” are finally untangled? Trillions of dollars in cuts have been promised, but not much in the way of specifics has been agreed upon. The Nation piece details how a new “super-committee” of Congress could “pull the trigger” on even more spending reductions.
How specific cuts will be determined, and who exactly is affected, is still hard to know. The deal truly “kicks the can down the road,” in the overused Washington parlance. The $917 billion in “immediate” cuts are not really immediate, nor enumerated. Federal spending will operate under caps over the next ten years equal to $917 billion less than what was projected, but the exact areas of reduction are unknown and obviously depend quite a bit on political outcomes. The caps are relatively modest until 2013, and a Republican Congress with a budget proposal from President Rick Perry would make much a different decision about where to cut than would Obama, Pelosi and Reid.
Then, $1.5 trillion in additional cuts will be determined by a so-called super committee of six Democrats and six Republicans. Entitlement programs like Medicare, Medicaid and Social Security are subject to “across-the-board” cuts here, and if no agreement is reached by November 23, a “trigger” will be pulled, with the gun aimed squarely at senior citizens and the Pentagon.
So there are a lot of permutations for these cuts—but make no mistake about who is exposed, and who isn’t. Cuts are guaranteed, revenue is not.
Finally, the most important argument for getting a debt deal, any debt deal, done was to avoid default and preserve the American economy. Predictions of mass unemployment and fiscal armageddon were heard at every turn. But could the cure for the debt crisis be worse than the so-called illness? Is the debt deal signed into law by President Obama on Tuesday really a recipe for economic disaster in its own right?
With mandated cuts in government spending and no path to more revenue to make up for it, the debt legislation will almost certainly lead to higher unemployment and a stalled recovery. Economists say the “restraint” imposed on an already “fragile” economic comeback will likely “make the economy weaker.”
But, many economists say, the agreement could endanger the anemic economic recovery — because of both what the deal includes and what it doesn’t. The government would cut back on spending, which has softened the blow of the slowdown, while failing to renew measures, such as a payroll tax cut, that have put money in consumers’ pockets.
The debt deal represents a striking reversal from a year ago, when jobs were atop the government’s agenda and both parties were arguing over who had the best plan to increase employment. But even as the agreement threatens to tamp down growth this year and next, it doesn’t go nearly as far as financial analysts and some senior officials had hoped toward reining in the national debt later this decade.
In short, some economists warn, deficit savings are too modest in the future and too severe in the present.
The agreement would mean the government has less money to provide employment opportunities for the 9.2 percent of Americans looking for jobs. It would probably cut aid to states, whose own cuts are contributing to the weak economy, and eliminate at least $350 billion from the defense budget, prompting layoffs at government contractors.
Americans would also have less money to spend next year because the president failed to persuade Congress to extend a 2 percentage-point payroll tax cut and unemployment insurance. Obama has frequently cited those measures, put into place in December, as important in offsetting sharply higher fuel and food costs.
“Why would you want to impose restraint on an economic recovery that’s already fragile?” asked Josh Feinman, chief global economist at Deutsche Bank Advisors. “You’re removing spending power from the economy at a time when it needs it. That’s likely to make the economy weaker.”
Feinman added that a slowing economy would actually set back efforts to curb the debt. “If the economy gets weak, the budget gets weaker, because tax revenues are going to slow,” he said.
it’s the best we could get with a sociopathic House.
i don’t know why people are pretending Obama has the votes to accomplish everything we’d want and how we’d want it. He doesn’t.
Obama Is Not Part Of The Solution. The Democratic Wing of the Democratic Party needs to look beyond Obama.
The party can’t continue getting distracted by his Republican Agenda.
Funny how people who’ll NEVER have to worry about healthcare, retirement, sending their kids to college and so on, just don’t get it, and will put corporate donors ahead of the people . FYI, Farm subsidies won’t be touched because the bachman family gets those and that kind of government assistance is OK.
Lesson for American voters… When you vote for someone who says he hates government you’re likely to get a politician willing to harm America for the sake of a temper tantrum.
Obama is now going to hold the record as being the first President to be considered a lame duck before he is even done with his first term. No one could possibly take him seriously after this disaster.
The sad part is that we can expect him to now give one of his nifty speeches during which he tells us liberals to grow up and stop whining and then his henchmen will be out to threaten us with the horrors of a Republican President if we don’t get in line.
When it happens I hope the rest of you will join me in sending a very pointed message back on where he can put that line.