Fiscal Cliff Deal: $620 Billion in Tax Hikes, $15 Billion in Spending Cuts (Surprise: It Makes the Deficit Bigger)
The US Senate rang in the New Year passing its take on the fiscal cliff -- a 157-page bill that kicks the US spending addiction can a few inches down the road.
Colleague Ed Henry says CBO indicates #fiscalcliff bill has $620 billion in new tax hikes. $15 billion in spending cuts.— Chad Pergram (@ChadPergram) January 1, 2013
That's a 41-to-1 ratio in tax hikes to spending cuts. Meanwhile, we're running annual deficits of more than $1 trillion. Given Washington's record, there's ample reason to be skeptical that even the $15 billion in spending cuts will ever really happen. Republicans made deals with the Democrats in the 1980s and 1990s, in which they were promised 3-to-1 and 2-to-1 spending to tax hike ratios, and while the tax hikes happened, the spending cuts never did. That was under Republican presidents. The current Democratic president may as well be sitting in the Oval Office lighting up piles of money fresh from the printing presses. Obama is declaring victory, which amounts to the same thing.
If you're keeping score at home, we're still heading over a cliff. Just, maybe, not today at this minute. But soon. We're in post-modern, post-budget territory and we may soon be in post-Republican territory.
Update: Yeah, about those "spending cuts"--
The "fiscal cliff" deal that was designed to save money actually includes $330.3 billion in new spending over the next decade, according to the official estimate the Congressional Budget Office released Tuesday afternoon.
CBO said the bill contains about $25.1 billion in new cuts, but those are swamped by the new spending on extended unemployment benefits for the long-term jobless and other new refundable tax credits that President Obama fought for.
Of those cuts, only $2 billion are scheduled to take effect in 2013.
The Senate's deal actually grows the national debt by $4 trillion over the next ten years. So, if my math is right, Obama was on track to leave a $22 trillion debt. Now he'll leave a debt north of that, somewhere around $24 to $26 trillion.
Barack Obama will have racked up something like $15 trillion in new debt in eight years, with the able assistance of Harry Reid, Nancy Pelosi, and if this deal stands, Mitch McConnell and John Boehner.