A deal—if they can keep it

It walks and talks like a deal, and nobody is happy with it.

Remember that great quote attributed to Benjamin Franklin? After an arduous session of wrangling and compromise to establish the Constitution, asked what sort of government they had devised, Franklin replied, “A Republic, madam, if you can keep it. “ He may not have said it, but it’s clever and fits our situation on Monday, August 1. Congrats, everyone, it’s looking as if ‘Debtmageddon’ may be averted! (Usual caveat: no votes have taken place yet today.)

So what is this deal? First, it would allow the debt ceiling to be raised through early 2013 as the Democrats and President Obama wanted. Modeled after Senate Minority Leader Mitch McConnell’s “Plan B” compromise, it would allow an initial increase in the ceiling of $900 billion, and additional increases afterward initiated by the President, subject to a resolution of disapproval by the Congress. Second, it would cut federal spending by about $1 trillion over 10 years. It does not include the assumption of savings from winding down the wars in Iraq and Afghanistan, which had been a provision in Senator Reid’s bill that House Republicans objected to. The deal establishes a 12-member joint bipartisan committee (some call it a super-committee… sounds cooler), a provision included in both the House and Senate bills. The committee’s mandate is to make recommendations to significantly improve short- and long-term fiscal imbalance, with a goal of cutting the deficit about $1.5 trillion over ten years, to match, dollar for dollar, future increases in the debt ceiling.

The deal includes a fallback if the super-committee is not able to identify additional cuts of at least $1.2 trillion. Across-the-board cuts of both defense and nondefense discretionary spending would be automatically triggered. Programs for the poor, such as Medicaid, would be exempted. But Medicare payments to providers could be included. A vote on a balanced budget amendment is required, but Republicans dropped their demand that the vote ‘clear;’ that is, the amendment is not required to pass by the 2/3 majority in both houses that would be needed to send the amendment to the states for ratification.

What about the R-word: revenues? Well, revenues, or ‘tax expenditures,’ don’t contribute to the initial $1 trillion in cuts. But the super-committee is not prohibited from including revenues in the second round of cuts.

It must be said, nobody loves this deal. But some hate it more than others The Washington Post reports members of the House Progressive Caucus have concerns, and members who have argued vehemently to exclude defense spending from cuts will also have problems with it.

Watch this space for further updates as this deal is brought to the floor of both houses for a vote.