Real Reform Punted

As virtually everyone should know by now, President Obama today signed a “bipartisan” bill into law that extends the debt ceiling immediately by $400 billion.  And proving that what the administration has been assuring us along is true – that the congressional bickering has prohibited the economy from stabilizing and growing and that a compromise was necessary to address this problem – the Dow rallied today with a 265.87 point loss, along with the Nasdaq dipping by 63.28 points and the S&P 500 dropping by 32.89.  On a side note, my representative, Gabrielle Giffords, was able to finally attend the 112th session.  While I am genuinely happy to see her recovering, I did find it interesting that a self-identified fiscal conservative and Blue Dog Democrat who voted for the Troubled Asset Relief Program, the American Recovery and Reinvestment Act (stimulus), and the Patient Protection and Affordable Care Act (ObamaCare) would show up to vote for more of a debt burden for us all (and generations that have not been born yet).   Given the limitations inherent to her current physical condition, it would seem this was a very important piece of legislation for her…

At any rate, the bill does nothing to substantively reform the causal factors for our national debt or the tax code itself.  But it does cut a little over $900 billion in spending right away.  As mentioned, however, it immediately authorizes $400 billion in new debt liabilities, with another $500 billion available subject to a vote of disapproval by the Congress – which can be vetoed.  This means absent that vote or if the veto is exercised, this additional amount is automatically eligible for the President to exercise at his discretion (I wonder which way he will lean?).  The Congress will then convene a joint commission of 12 congressmen (3 from each party and house) to devise and recommend another minimum of $1.5 trillion in spending cuts which must then be voted on by the full Congress later this year.  Absent adoption of the recommendations, automatic spending cuts across the board will kick in – to the matching tune of up to $1.2 trillion which the President will then be allowed to add to the debt ceiling automatically.  All this, again, without any substantive reforms to the tax code or the primary contributors to the debt.  Awesome.

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  1. #1 by Chuck Temm on August 5, 2011 - 6:34 AM

    Obama blaming Congress for the economic problems is a bit funny. When in a hole, the old adage is to stop digging, something this guy hasn’t stopped since he demanded the huge and costly spendathon bill shortly after inauguration.

    Congress, at least part of it actually tried (admittedly on the margins) to slow the rate of spending growth, not make actual cuts. Though the attempt was weak, the desperate attempts by Dems to block even that shows this to be at least a politically motivated defense than a economic one. We’ve seen repeatedly Keynesian economics fails and the last 2-3 years has been a prime example.

    No, to paraphrase Rep Pelosi; we won’t put the burden of deficit reduction on the backs of our seniors as they vote, we’ll put it on our kids/grandkids instead

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