The Making of Debt Deal
The leaders of both parties and the President have come to a deal. The full Senate and House have yet to vote on it. However, after all the fighting and the loss of $7 trillion so far to the economy, the deal may be nearly done.
Speaker John Boehner sent a powerpoint presentation to his members in the House. Here it is:
What is missing from this presentation by Boehner are the exact numbers that will be cut from each section of the budget, but at least the cuts don’t begin until 2013 which gives the economy another to recover. With 25% or more of American businesses having contracts with or working directly for the federal government, immediate cuts could cause even less demand which would slow the economy even more than the stagnation we’re already seeing. This is a big win for American businesses.
Now if we can get out this death spiral that has occurred over the last week, maybe Congress can get back to the job of actually creating positive policies that can create the jobs Americans need. Like PIMCO’s CEO El-Erian, I vote for an infrastructure bank that partners private money with public resources to rebuild America. GM’s CEO said he even approves of a gas tax to fund infrastructure repairs and rebuilding – that’s a first for an auto company but shows how far the industry has come since its near death experience two years ago.
The rest of the work will be much harder because of ideological differences in Congress, but the fact is we desperately need a tax overhaul to eliminate most of the $1.2 trillion tax expenditures in the code as well as to simplify it. If most of the spending through the tax code is eliminated, tax rates could be lowered while still producing the needed revenues to pay down the debt more quickly and maintain vital services for our families. And of course, that’s not even counting the messy debate about drawing down in Afghanistan and leaving Iraq. But let’s face it, we’re spending more than a $1 billion per solider per year on these wars while asking ordinary, hard pressed middle income families to make sacrifices in Pell Grants, health care, education and elsewhere.