With debt deal done, expect more drama later this year

WASHINGTON – The U.S. avoided default today after the Senate passed a bill raising the government’s borrowing authority while making over $2 trillion in long-term spending cuts. Both of Minnesota’s DFL Senators voted for the agreement, which passed the Senate 74-26.

The Senate’s vote and the president’s signature end months of heated disagreement and confrontation between Democrats and Republicans in Washington over an issue that had traditionally ended in an embarrassing vote for past administrations, but not the sweeping concessions that Republicans managed to extract this time around.

As she walked out of the Senate chamber after voting, DFL Sen. Amy Klobuchar was relieved that an agreement had been reached, even if it was imperfect.

“We didn’t reduce a number of things that I think would have made a major problem for our economy,” argued Klobuchar, who pointed to Social Security and Medicaid, which were spared from cuts by this deal.

The agreement has two parts. First, it makes $917 billion in cuts over the next decade, with many of the cuts actually set to begin in 2013 and later, after the next election. As history has shown before, a future Congress could also undo elements of the deal over time.

Medicare was also spared for now, although the health insurance program could be cut if a special bicameral, bipartisan committee of lawmakers doesn’t come up with a second rounds of cuts totaling at least $1.2 trillion by Thanksgiving.

More confrontations in September and December possible

It’s still unclear exactly where the cuts will fall. The agreement specifies spending caps in defense and non-defense spending over the next two years. Those caps are actually considerably higher than spending caps that made up the budget road map (known as the Ryan plan after the Budget Committee chairman Rep. Paul Ryan) passed by the House earlier this year.

It’s now up to House and Senate appropriators to work within those spending caps as they merge their appropriations bills ahead of the beginning of the federal government’s new fiscal year on Oct. 1.

While the two chambers can now at least agree on the number of dollars they have to spend, many of the House-passed bills contain policy riders that the Democratic-controlled Senate considers unacceptable, including provisions that would weaken the Environmental Protection Agency and the rights of workers to unionize in the transportation sector. Look for more possible brinksmanship between the parties in the fall with those policy riders.

Another potential confrontation could come in November and December after the special committee reports its recommendations for longer-term savings. One Democratic Senate aide worried that Republicans might provoke another showdown then.

Under the agreement, the trigger mechanisms make automatic cuts in payments to Medicare providers and security spending including defense, State Department operations, homeland security and veterans’ affairs if the committee can’t reach agreement. The aide worried that Republicans, having spread out the budget-cutting pain in their area over a variety of programs, might be willing to let the cuts to Medicare take place.

Ethanol agreement orphaned by deficit deal

One victim of the budget agreement was an agreement crafted by Klobuchar with the ethanol industry to end a major subsidy for the corn-based fuel while preserving other government support for ethanol. Since the measure that passed the House and Senate included no revenues of any kind, the ethanol deal, which includes changes to the tax code, couldn’t be included in the final agreement even though it included budget savings.

Klobuchar hoped that lawmakers could take up the ethanol provision when they return in September and tax breaks like those could also be fodder for the special budget-cutting committee.

Reflecting on a process that had lasted months and distracted lawmakers and the Obama Administration from other goals, such as reducing unemployment, Klobuchar appeared irritated.

“What bothers me how inefficient it is and how we wait to the last minute to get things done,” Klobuchar said. “That’s disturbing and that’s not how anyone would run their family, their business or even a local government, so I’d like to see that change.”

But with re-election on the minds of the president and many lawmakers, including Klobuchar, and a divided, heavily partisan Congress, expect more conflicts like this one in the coming months.

  • Ben Van Sant

    Senator Klobachar thinks the process (to raise the debt ceiling) was inefficent. I agree, but the debt limit legislation process marked the strongest sign yet by the influence of a group of elected officals dedicated to coarraling the beast, i.e. runaway federal government influence. Senator Amy, it is no way to run a goverment – its just too damned big. The Senator want to see things change, well, join the club. I’d like to see our two senators begin to chip away at the extra responsibilites Washington has taken on. Make goverment smaller, more efficent (see tax bills), less expensive and more simple.

    The debt limit vote was a small victory and I can see how it could be followed with further successes of the movement to bring some of the power back home.

    Good Luck, Amy and Al.