Two Facts about the Debt Ceiling Deal
2011-08-01 - by
It’s pretty hard to sort through all the facts and figures and the rhetoric and posturing about the latest debt ceiling deal – but two facts seem clear.
President Obama, Speaker Boehner, Mitch McConnell and Harry Reid all say the latest agreement will raise the debt ceiling $2.4 trillion in exchange for $2.5 trillion in cuts.
The First Fact: The $2.4 trillion will be borrowed over the next year; only $6 billion of the cuts will be made over the next year. The rest are ‘promised’ over a decade. (In 1985 Congress passed the same type of deal and future Congressmen simply ignored the cuts.)
Second, Obama, Boehner, McConnell and Reid are comparing apples and oranges – compounding a year of debt increases to ten years of spending cuts.
Fact #2 – Comparing apples to apples, even if the Obama, Boehner, McConnell and Reid deal works out exactly as they plan they’re swapping $2.5 trillion in cuts (over ten years) for $7 trillion in debt increases (over ten years).
So, worst case: We’re swapping $2.4 trillion in debt increases now for $6 billion in cuts now. And the promised cuts could vanish down the road.
Best case: Congress makes every dollar of the promised cuts over ten years.
So in the best case we end up seven trillion more in debt.
Two Facts about the Debt Ceiling Deal
2011-08-01/
It’s pretty hard to sort through all the facts and figures and the rhetoric and posturing about the latest debt ceiling deal – but two facts seem clear.
President Obama, Speaker Boehner, Mitch McConnell and Harry Reid all say the latest agreement will raise the debt ceiling $2.4 trillion in exchange for $2.5 trillion in cuts.
The First Fact: The $2.4 trillion will be borrowed over the next year; only $6 billion of the cuts will be made over the next year. The rest are ‘promised’ over a decade. (In 1985 Congress passed the same type of deal and future Congressmen simply ignored the cuts.)
Second, Obama, Boehner, McConnell and Reid are comparing apples and oranges – compounding a year of debt increases to ten years of spending cuts.
Fact #2 – Comparing apples to apples, even if the Obama, Boehner, McConnell and Reid deal works out exactly as they plan they’re swapping $2.5 trillion in cuts (over ten years) for $7 trillion in debt increases (over ten years).
So, worst case: We’re swapping $2.4 trillion in debt increases now for $6 billion in cuts now. And the promised cuts could vanish down the road.
Best case: Congress makes every dollar of the promised cuts over ten years.
So in the best case we end up seven trillion more in debt.