In a series of statements, Sens. Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) — who stood side-by-side on the Senate floor — and then President Obama announced that a framework for a debt-ceiling deal has been reached. The sign of unity suggested that both parties would be dragging yes votes to the floor of the House and Senate.
In his telling, Obama said that the committee in the second tranche of debt reduction would put everything on the table, including taxes. (But he, after all, must sell the Democrats on a deal they rejected and has since tilted even further to the right.) In reality the deal is virtually everything Republicans could hope for.
There are two defense-funding issues in this proposed framework. A GOP source on the House member conference tells me that Rep. Paul Ryan (R-Wis.) just said that the speaker “did a great job of pushing back on defense. We were scared of the Reid firewall and this helps us dramatically protect defense.” Here is the outline on the defense cut issue fromthe House Republican perspective:
FY 2012 and 2013
In the House-passed bill, defense funding would be a range of plus-or-minus three percent from last year’s level. In this new framework, the Democrats tried to insist on locking in Defense cuts — which Republicans consider irresponsible and strongly opposed. Instead, the emerging framework creates a ‘firewall’ that separates all security spending (security spending is not just DoD but also foreign aid and Homeland Security, for example) from non-security spending. This structure allows our members, led by House Armed Services Chairman Rogers and McKeon, to work with both parties to do the right thing and ensure that any cuts do not harm defense. While Democrats may continue to insist and try to cut defense, Republicans will fight on behalf of our Armed Forces and make sure our troops get the resources they need.
The second issue regarding defense is in the ‘trigger’ or ‘contingency.’ The point of the ‘backstop’ is that it isn’t supposed to be used.
•Any savings from the Joint Committee would reduce the amount of the sequestration (dollar-for-dollar).
•Even if the committee failed to produce a single dollar in savings, Defense would be on the hook for less than $500 billion over nine years, beginning in 2013.
•FY 2012 would not be affected under any circumstances,
•If this occurs - Congress, and the President (whether Obama or his successor), could replace the Defense reductions with other spending reductions.
•And, again, the point of the ‘backstop’ is that it never, ever happens.
How did taxes make their way into the discussion? Well, they don't really make a reappearance. A technical discsussion is sure to follow. Suffice it to say the committee’s work would be scored by CBO using a 10-year baseline making it virtually impossible for taxes to be used to make up the $1.5 trillion in debt reduction. All in all Republicans have much to crow about.
UPDATE: Here is the PowerPoint slide show that the speaker of the House used to explain the deal to House members.
UPDATE II: If you are confused on the taxes, you are not alone. A GOP aide authorized to speak on background explains: “CBO’s current law baseline assumes millions of middle class families will be hit by the AMT and also assumes large, across-the-board tax increases in 2013 (i.e., the expiration of all 01/03 tax rates). With current law as the baseline to measure deficit reduction, efforts by this Joint Committee to increase revenue would not officially ‘reduce the deficit’ unless the proposed tax increases are in excess of $3.5 trillion — in other words: tax hikes aren’t going to be a part of this deal. Tax hikes on top of tax hikes are a non-starter for the American people. This exercise underscores the painful folly on trying to chase ever-higher spending in Washington with ever-higher tax hikes on job creators and American families.”
More on the debt standoff from The Washington Post:
Rubin: The dangers of overreach in the debt deal
Thiessen: The Tea Party ‘hobbits’ win
Miller: Disaster averted, decline still straight ahead
Serwer: “Starve the beast” wins