The debt-limit compromise leaves Cato’s Michael Tanner wanting. He explains why in a new column for National Review Online:
To say that Congress labored mightily and brought forth a mouse is an insult to mice.
In the face of a $1.1 trillion budget deficit, a $14.3 trillion official debt, and a real indebtedness of more than $120 trillion, Congress has just voted to increase the debt ceiling to roughly $16.8 trillion through 2012 while allowing the national debt to eventually rise to some $21 trillion by 2020. That it otherwise would have reached $23 trillion is scant comfort. With our country careering toward a fiscal cliff, Congress has chosen to tap on the breaks, not change direction.
The deal was very likely the best that Republicans could get under the circumstances, but it does frighteningly little to solve our long-term fiscal problems.
In theory, the deal starts with a spending reduction of roughly $935 billion over the next ten years. That would be an average cut of just under $100 billion per year, or a bit less than the federal government will borrow this month. But wait — that’s not actually a $935 billion reduction in spending. It’s a reduction from the planned baseline increase in spending. What the deal does is to constrain spending at a somewhat slower rate of growth. Moreover, about $160 billion of the $935 billion actually comes not from reductions in programmatic spending, but from interest savings. And, of course, most of the purported reductions are pushed well out into the future. It will cut barely $21 billion from the 2012 budget, about 1.5 percent. Since it is impossible for this Congress to bind future Congresses, there is ample reason to be skeptical about whether cuts scheduled to take place long after most of these lawmakers have retired will ever occur.
