Debt deal: $32.4 billion per page
The debt framework President Obama and congressional leaders reached Sunday night runs 74 pages long, and could authorize as much as $2.4 trillion in new debt — or $32.4 billion per page.
That debt increase will get the country through the 2012 election, both sides said, but it does not bring to an end the sea of red ink that will continue to wash over the federal government for the foreseeable future.
In the near term, the bill sets budget numbers for 2012 that would require a real cut of $7 billion in discretionary spending from 2011 levels, though that’s $25 billion less than projected spending would have been had it kept pace with inflation.
Over the long term, the deal could lead to as much as $2.4 trillion in lower-than-projected spending over the next decade, which also works out to about $32.4 billion per page in lower spending — if all of the conditions are met. But during those 10 years, that still means the country could pile up another $10.4 trillion in new debt, which would leave the government well more than $20 trillion in debt by the end of the decade.
The deal immediately imposes caps on discretionary spending for the next decade, including a total of $1.043 trillion in fiscal year 2012, which begins Oct. 1, rising to $1.047 trillion in 2013 and all the way to $1.234 trillion by 2021.
Discretionary spending encompasses defense and most domestic spending outside of Social Security, Medicare, Medicaid and other programs like agriculture payments that are automatically determined by formula.
Over 10 years, the bill would mean $741 billion in lower discretionary spending than currently projected, according to the Congressional Budget Office. That works out to about a 6 percent cut, meaning $11.26 trillion in discretionary spending would still be allowed.
Republicans said it’s the first time that any spending cuts have been attached to a debt increase, and called it a move in the right direction.
“This is the best agreement we could have hoped for now, with Republicans in control of just the House of Representatives, and Democrats still controlling the Senate and White House,” said Sen. Kay Bailey Hutchison, Texas Republican. “The agreement takes a series of small but significant steps in the right direction, which is better than big steps in the wrong direction.”
Meanwhile, Democratic leaders involved in the negotiations said they were able to keep the discretionary spending cuts to a minimum — just $7 billion in real terms in 2012, and an additional $3 billion in 2013.
And they also guaranteed a certain level of those cuts will have to come out of defense programs, rather than basic domestic spending.
“It protects key investments up front in the cuts that are launched initially, the trillion dollars,” White House press secretary Jay Carney said. “It creates a firewall that ensures that savings are gleaned not just from non-defense discretionary programs, but from defense.”
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.