Sunday, July 31, 2011

Debt Deal: No New Taxes!

Although tax revenue is historically low and federal spending is historically high, the tentative debt agreement (see earlier essay on Dissenting Justice) would not include a mandate to implement or even discuss tax increases. Instead, the deal would slash 2.8 trillion dollars from federal agencies over the next ten years. It would also create a special bipartisan "Super Committee" in Congress to allocate spending cuts (note: the full Congress would have to approve these cuts for them to have the effect of law).

The deal, however, would not require the special committee to consider any tax increases. The combination of lower tax revenue and higher spending, however, has created the historically high federal budget deficit. Nevertheless, Senator Mitch McConnell says tax increases are definitely "off the table." Senator Durbin says that keeping taxes off the table is a "serious mistake." The National Journal has more analysis.

Question: What exactly does Obama gain from this "deal" -- except for an increase in the debt ceiling, which (except for a few moments in history) has been routinely granted?

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