Budget Battle Leaves Congress in a Bind
You’ve seen the headlines: "Budget Deal Avoids Government Shutdown."
There’s just one little problem -- those headlines are wrong.
For sure, the move by House Republicans to fold $4 billion of spending cuts that Democrats can mostly agree to delays the prospect of a shutdown. But by extending funding for just two weeks instead of having the bigger fight to pay for government operations for the remaining seven months of the fiscal year, Congress did what Congress does best.
Lawmakers kicked the can down the road.
The next fight will be a doozy. House Republicans want to cut about $60 billion from funding to operate federal programs until fiscal 2012, which starts Oct. 1, and another $40 billion next year. The $100 billion in cuts would honor a Tea Party-driven pledge the GOP made last year; they claim winning control of the House in 2010 was a mandate for them to deliver what they promised.
Not so fast, say the Democrats, who still control the Senate. They argue cuts of that magnitude would not only hamper vital federal programs but would threaten to undercut the economy just as it’s building steam after climbing out of the worst recession in several generations.
Both sides have ammunition to back their claims.
Democrats can point to a study this week from Moody’s Analytics that forecasts that cuts in the range of $100 billion would trim 1% from the growth rate of the gross domestic product. They can also tout reports that the cuts and slowing growth would prevent the creation of tens of thousands of jobs.
Republicans can counter with the words of Federal Reserve Chairman Ben Bernanke, who said Tuesday that he thinks the jobs projections are wildly off base.
But here’s the reality that neither side is talking about: Cutting $100 billion from this budget through the next one will put just a tiny dent in the deficit. The move would be loaded with symbolism, but the debt clock would continue to spin like the wheels on a quarter slot machine in Vegas.
Serious progress on the budget deficit and the federal debt won’t be seen until both parties acknowledge the 800-pound gorilla in the room and figure out how to address the soaring costs of Social Security, Medicare and Medicaid.
Lawmakers know something must be done, and they acknowledge that the longer they wait the worse the entitlement problem will become, as more and more Baby Boomers retire and start taking money and benefits out instead of paying in.
But neither side is willing to go first, fearing payback by voters in the 2012 elections. Because of that political paralysis, don’t look for serious steps on the entitlement front until 2013 at the earliest.
Lawmakers from both parties are in a serious bind in the budget and spending fight, and a recent poll by the Kaiser Family Foundation and Harvard School of Public Health shows why.
Americans essentially want it both ways.
Two-thirds in the Kaiser/Harvard poll say they are “very concerned” about the deficit, and 57% want Congress to address it “mainly by reducing spending on government programs and services.”
So far, so good, except for this: Nearly two-thirds of respondents say they don’t want cuts to affect Social Security, 56% want Congress to leave Medicare alone and nearly half, 47%, say the same about Medicaid.
In fact, on a 12-item list, there is majority support for cutting only one program: Foreign aid. While a favorite target, such aid amounts to $63 billion, about 1.7% of all spending in Obama’s proposed budget for fiscal 2012. In a budget with a projected $1.6-trillion deficit, that’s a figurative drop in the bucket.
Real progress on the deficit will require real pain, maybe even -- dare we say it -- higher taxes resulting in the deep-sixing of some cherished deductions.
The big question is whether Americans who say they want a balanced budget are willing to sacrifice to help make it so. Finding the answer will add some new faces to the unemployment line over the next few years -- members of Congress who guess incorrectly.