DEBT DEAL SLEIGHT OF HAND
By Attorney Jonathan Emord
August 8, 2011
The debt deal proves the White House and Congress inept. The nation is void of leadership capable of averting America’s impending economic catastrophe. Refusing to confront the reality of a debt soaring out of control, the President and Congressional leaders have agreed to a measure that will result in no reduction in government spending only a modest reduction in the rate of increase in that spending, no payments to stem the growth of or reduce the nation’s $14.5 trillion debt, and no payment to reduce the nation’s $61 trillion (and growing) unfunded liabilities for entitlement and other programs. In short, the debt deal is a dramatic farce. Although it raised the debt ceiling, that happenstance does nothing to change the underlying debt dynamic that threatens the very survival of the United States.
The deal reached increases the debt ceiling (the amount the federal government can spend without new congressional authority) by $2.4 trillion. It allows immediate increase in federal spending of $400 billion. President Obama is authorized to request an additional $500 billion in the next few months. A further increase of $1.2 trillion and $1.5 trillion is permitted in the debt ceiling after a special committee defines matching levels of additional spending cuts. The deal calls for $900 billion in spending cuts over the next ten years, thus causing only about $91 billion a year to be cut from the federal budget. That $91 billion a year does not cut the federal budget, it merely reduces the rate of increase. In short, the nation is still on a crisis course, spending itself into oblivion; there are no real cuts in government spending created by this deal. Under the deal a House and Senate special committee of twelve people is assigned the task of identifying spending cuts by Thanksgiving, another dramatic side-show and proof that we are leaderless. If the committee deadlocks or Congress rejects its recommendations, then across the board spending cuts are supposed to occur, totaling $1.2 trillion (but watch politicians maneuver to wiggle out of that commitment).