Thursday, June 1, 2023

Debt ceiling bill not as bad as it could be. And we can make it better after 2024.

As the debt limit deal goes through Congress, getting through the House and being debated at the Senate sooner than later, let's go over the AP's summary of the agreement.
The agreement would keep nondefense spending roughly flat in the 2024 fiscal year and increase it by 1% the following year, as well as suspend the debt limit until January 2025 — past the next presidential election.

For the next fiscal year, the bill matches Biden’s proposed defense budget of $886 billion and allots $704 billion for nondefense spending.

The bill also requires Congress to approve 12 annual spending bills or face a snapback to spending limits from the previous year, which would mean a 1% cut.
So does that mean would-be saboteurs in the GOP House can’t shut down the government when the Fiscal Year ends on September 30? Because that’s what I figure would be their next move, because even though a budget would be in place, they could hold up releasing the funds, or some similar monkey business. I would guess that there will be performance artist MAGAts trying some stunts over the next 4 months to move money into one area and take it away from others, but it still seems like a helluva cave by McCarthy and the rest of the House GOPs.

Which hopefully means that Biden privately threatened to walk away and use the 14th Amendment to pay the bills and obliterate the debt ceiling (which is what I wanted him to do all along). And maybe McCarthy and other DC GOP insiders knew Republicans were going to be blamed for the economic damage from a debt ceiling meltdown.

I’m skeptical of that calculation - I think low-info voters would blame the president in charge when the economy takes a downturn, and hurting Biden and the Dems for 2024 was a central part of the GOP’s hostage-taking strategy on the debt ceiling. But because they couldn't get the big stuff, this deal has a lot of symbolic budget cuts related to “concerns” that only exist in the Faux News BubbleWorld.
Republicans targeted money that the IRS was allotted last year to crack down on tax fraud. The bill bites into some IRS funding, rescinding $1.4 billion. Budget scorekeepers said the change would increase deficits by $900 million because less enforcement means less revenue coming into the Treasury.

The White House has said that the deal also includes an agreement to take $20 billion from the IRS over the next two years and use that money for other nondefense programs.
But it also means that IRS funding will be increased by around $60 billion compared to what it was before Biden took office. The Treasury Department has already credited the added funding to improvements in service to everyday taxpayers and increased speed of refunds during this year’s tax season, and in the long run, it will still lower the deficit due to increased enforcement against tax cheats. I’ll take that.

We've also found out over the holiday weekend that our state might be giving a sizable contribution to the "savings."

Wisconsin officials are preparing to send back some of the federal pandemic funding that has not yet been spent under a deal between President Joe Biden and House Speaker Kevin McCarthy to raise the country's debt limit as a federal government default looms.

Gov. Tony Evers told reporters on Tuesday his administration is planning for the possibility, which could result in Wisconsin losing some of the $447 million in federal funds state officials have not yet spent out of the billions it was allocated as part of federal laws passed by Congress to help states navigate and recover from the coronavirus pandemic.

"We haven't heard anything because I don't think the written document exists so we are planning all across our agencies," Evers told reporters in Brown Deer, according to WISN-TV. "We're looking at what is known and seeing how much money we would have to send back but at this point in time we're not anywhere near because they aren't anywhere near soup yet."…

When the GOP-controlled House passed a bill in April to raise the debt limit in exchange for cutting various types of spending, the nonpartisan Congressional Budget Office estimated clawing back pandemic funding would save about $30 billion. Government accountants excluded $316 billion in remaining funds that the government is legally obligated to pay out. An additional $16 billion that CBO estimated would be committed before any deal was finalized was also excluded.
Like the Guv, I am unclear how “unused” was determined, and what time period is the cutoff point. The CBO analysis of the debt ceiling agreement gives us some specifics, saying "a majority of the reductions would come from the Public Health and Social Service Emergency Fund and from certain infrastructure and disaster relief programs," and basically takes back some of the money that was budgeted for those duties. So Tony, make an announcement and get that money obligated before Biden signs the bill! (I'm mostly kidding)

If you widen out to CBO's analysis of the full bill, you'll see a similar pattern.

Most of the budget cuts come from "updated projections from lower funding”, and here’s how CBO explains that category.
Caps on discretionary funding in fiscal years 2024 and 2025 would affect CBO’s projections of discretionary funding in 2026 and beyond because of the way that CBO is required to project such funding. In CBO’s projections for discretionary spending, funding in a future year generally is based on the projection (or amount provided) for the prior year. Because the caps would reduce CBO’s projections of funding for fiscal year 2025, the projections for the following year (and each year thereafter) also would be reduced.
Of course, if those numbers are adjusted to reality and future needs higher levels, those “savings” will never exist. But hey, it sounds big!

We’ll see if Coffee Boy is still around in those future years to see his dream of future budget cuts come to fruition.

We also know that this will not be the only cuts imposed onto services that Americans depend on. McCarthy says he and his fellow Republicans will be back for more, if voters keep them in office after 2024. No matter what they claimed what “off limits” in these recent discussions.

God forbid we ask the rich and corporate to give back any of the benefits the GOPs gave them in the GOP Tax Scam of 2017 to reduce the deficit, or other giveaways those privileged few have gotten in my 48-year-old lifetime.

There will certainly be people worse off from this, particularly due to the wasteful "work requirements" that are more likely to take away benefits from working people than it does in getting people to enter the work force.

And that's one of several items that need to be fixed the minute Dems regain total control in DC. This includes the removal of the debt ceiling as a THING, because markets decide if US Treasuries are able to be bought, and budgets decide how much we can spend.

But it's also a deal worth signing onto for the next 2 years, as it will keep us from an economic meltdown caused by failing to pay our bills due to an artificial debt ceiling. Which means it becomes less likely for Americans to lose their jobs and go through more economic troubles through no fault of their own, which is something we should have driving our economic strategy. Take it for now, and remind people just how Republicans endangered millions of people for stupid, symbolic and spiteful reasons.
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1 comment:

  1. AnonymousJune 2, 2023 at 11:58 AM

    And now it’s gone through the Senate and is heading to President Biden for signature today.

    Interesting Wisconsin breakdown in how our members of Congress voted. In the House, both Dems (Pocan and Moore) voted no due to some of the changes, GOP Tom Tiffany voted no, and all other 4 GOPs voted Yes.

    In the Senate Tammy Baldwin voted Yes, and Ron (put Social Secuirty on the chopping block every year) Johnson opted No.

    The markets are soothed. DOW up 663 as I write this.

    Jake

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