This morning, Reuters noted that the odds of a “grand bargain” on taxes and spending between Democratic and Republican lawmakers are rapidly diminishing — because the deficit is falling. “A sudden improvement in the outlook for the government deficit over the next decade has alleviated some of the pressure on lawmakers to act,” Reuters observed. Likewise, Washington’s obsession with scandals — and the GOP’s attempt to wring political advantage from them — has taken the focus off of debt and spending.
But there’s something else that makes a “grand bargain” on the deficit unnecessary — the fact that Obama and Congress have already taken three major actions to deal with the deficit.
The 2011 Budget Control Act slashed spending by $1 trillion over the next ten years, including a cut to Medicare provider payments. The fiscal cliff deal, passed at the beginning of this year, included a tax increase for income over $450,000, raising $617 billion in new revenue from 2013 to 2022. It also included a hike in the estate tax, a permanent fix for the Alternative Minimum Tax, and additional unemployment benefits. And the sequester — which is the result of the Budget Control Act — involves large cuts of nearly $90 billion for nearly every year between 2014 and 2022.
Compare all of this to the “grand bargain” proposed by President Obama in his negotiations over the debt ceiling two years ago. The proposed deal — which was ultimately killed by conservative House Republicans — included Medicare provider cuts, $800 billion in new revenue, and discretionary spending cuts of $1.2 trillion over the next ten years.
In other words, the “grand bargain” Republicans rejected two years ago was ultimately passed in several installments beginning in 2011, and ending this January. Not only has Congress accomplished its goals with regards to deficit reduction — the Congressional Budget Office projects a $642 billion budget deficit for fiscal year 2013, down $200 billion from its projection at the beginning of the year — but Congress and the White House have achieved the impossible and cut a grand bargain that will affect federal spending for the next decade. Indeed, put in those terms, it’s something of a real accomplishment.
What all this shows is that the GOP was never really interested in a “grand bargain” to take debt and deficits off the table. Rather, as evidenced by the rhetoric of many Congressional Republican, the real goal was to dismantle the social safety net with aggressive cuts. At the moment, that hasn’t been successful — entitlements have been largely exempted. And that’s why Republicans are planning to use the looming need to raise the debt ceiling as another point at which to extract a ransom and cut entitlements. The real goal, after all, isn’t to reduce spending — you can do that without harming the social safety net, as the current falling deficit illustrates. Rather, the goal is to dramatically reduce the scope of what government does, particularly its ability to provide basic economic security to its citizens.