AP: ‘Almost None’ of Debt Deal’s Spending Cuts Would Occur Until 2014
- Posted on August 1, 2011 at 3:46pm by
Jonathon M. Seidl
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Editor’s note: the following is an Associated Press piece on the effects of the debt deal.
WASHINGTON (AP) — The first phase of a deal to raise the government’s borrowing limit would pose little threat to the economy in the short term because almost none of the spending cuts would occur before 2014.
Discretionary spending, which excludes Social Security, Medicare and Medicaid, would be cut by $21 billion in 2012 and $42 billion in 2013, according to an analysis by the Congressional Budget Office. That‘s a small fraction of the nation’s $14 trillion economy.
“The immediate economic impact of the … deal should be relatively minor,” Brian Gardner, an analyst at Keefe, Bruyette and Woods, said in a research note. “As is usually the case, most of the cuts” have been put off for several years.
The first phase of cuts would reduce spending by $917 billion over 10 years. A congressional committee would decide on a second phase of cuts totaling $1.5 trillion.
The Obama administration had said the government would have run out of cash to pay its bills without an increase in the $14.3 trillion borrowing limit by Tuesday.
The deal comes as the U.S. economy is worsening. Manufacturing activity dropped to its lowest level in two years, according to a survey released Monday.
And economic growth dropped below 1 percent in the first six months of this year, the government said last week, much weaker than economists had expected. Government spending fell for a third straight quarter, contributing to the slower growth.
The sluggishness of the economy has raised concerns that it could slide back into recession. Its weakened state has reduced the economy’s ability to absorb any new shocks, such as a sharp slowdown in government spending.
Still, the deal’s overall approach mirrors advice offered this year by Federal Reserve Chairman Ben Bernanke. In testimony to Congress, Bernanke has advocated for a long-term deficit-reduction plan but has cautioned lawmakers not to make deep cuts while the economy remains weak.
Democratic lawmakers favored smaller cuts over the next two years to avoid hurting the fragile economic recovery, said staffers from both parties with knowledge of the negotiations. Republicans wanted upfront cuts totaling tens of billions of dollars.
The staffers spoke on condition of anonymity because they were not authorized to discuss the negotiations.
The deal enables the government to avoid defaulting on the nation’s debt. Credit ratings agencies may still downgrade their ratings of U.S. debt.
There’s little in the package that would promote growth, many economists said. And some measures that were intended to stimulate the economy are slated to expire at year’s end. For example, the end of a Social Security tax cut and extended unemployment benefits, put in place late last year, will probably reduce consumer spending and limit growth, analysts say.
With Congress focused on the second round of cuts later this year, as called for under the agreement, it will be difficult to extend either measure.
Michael Feroli, an economist at JPMorgan Chase, forecasts that cuts in federal spending and the end of the tax cut could reduce growth by about 1.5 percentage points in 2012.
–
AP Business Writer Daniel Wagner contributed to this report.
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Comments (116)
Cheetosareus
Posted on August 1, 2011 at 4:22pmBoehner’s comment that “We got 98% of what we wanted” is a disguised lie. He’s not saying how much crap we have to swallow to get that jso called 98%. There are two columns here and no one is looking at the down side..the cost. Kicking the responsibility for cuts and taxes to a “super congresional committee of 12” is unconstitutional. That’s the form of government by committee in Communist Russia. If anybody in my state votes for Reid’s bill they will not get my vote.
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:39pmNearly all of the reporting on this is presuming that they are really trying to do something to rescue us. They are not! All of this has been planned for many decades.
None of us could possibly run a business or our personal finances this way and we all know it! How can we add a bunch of zeros after a number and it magically will work?! Smoke and mirrors, just like any other charlatan uses to fool the gullible.
Report Post »jhaydeng
Posted on August 1, 2011 at 5:57pmCan I ask why someone can‘t create tax cuts and get rid of Bush’s name! I can’t take hearing the Bush tax cuts anymore! Are their any independent thinkers in Congress anymore? Please!
Report Post »the hawk
Posted on August 1, 2011 at 6:06pmiT’S A TOTAL SHAM !………. EMERGENCY…..kick the can Down the road.
Report Post »Sound kinda like that Bank bailout?……….End of the World as we know it !
pschlentz
Posted on August 1, 2011 at 6:56pmBoehner is a fricking RHINO!!!!!!!!!!
Report Post »loriann12
Posted on August 1, 2011 at 6:56pmAll they need to do is make sure everyone on disability is actually disabled. My 21 year old Down Syndrome and autistic son had ot have written proof of his disability, but they give it to any black person that says they’re disabled. I guess they get a medicaid doctor to say they are.
Report Post »wesleyapril
Posted on August 2, 2011 at 7:49amI don’t know about you but I can tell you that whatever they pass will be horrible for the American people. I don’t trust the AP to tell me that they know there damn way out of a paper bag either.
You all better get used to saying “masta” and maybe in Chinese – because they have tapped the nails into the coffin of the US of A.
Report Post »NotFooled
Posted on August 2, 2011 at 9:32amHas anyone ever noticed that none of these bills that they are passing are going to be effect until 2014?
What’s in store for us in 2014?
HEALTHCARE BILL 2014.
Report Post »leahasevedo
Posted on August 2, 2011 at 11:52amwhat everyone here is failing to realize is that the left is claiming that this is a win for the tea party so when this crap bill starts chocking us to death they can cry” see this is their bill, this is what you get with the tea party and conservatives”. this is a set up for blame and the republicans sold us out. the left always does it to us. the lie and twist facts. they call this a win for us, when really we are all against it. get the news coverage of them hating this bill and only consider rhino republicans as mouth pieces for the tea party. so i hope that someone makes it clear the the media somehow that the tea party don’t like this bill and are very angry that any of our elected officals voted for it.
Report Post »cloudsofwar
Posted on August 1, 2011 at 4:21pmOur taxes are going to go up, they made sure of that. 14T in Debt and counting up. pay uncle sam now or pay the uncle later but pay we will. Corruption beyond belief. generations of new slaves.
Report Post »IAMNOTKNOWING
Posted on August 1, 2011 at 5:32pmClose enough.
Only exception? …. not generation(s), … “generation.”
This is it, Folks!
The Anti-Christ just got the last thing he needs, funding to finish out this term.
Next? Legalize all the illegal aliens (in case there turns out to be an election.)
The New World Order Bunch are “shooting the moon!” This is it.
They’ve been trying to and planning to take over this country for a long, long time.
They feel this is there moment.
This country has the slowest glide-slope, but MAKE NO MISTAKE, we’re going “in,” just like Greece, Ireland, Spain, Portugal, ala the Middle East.
Obama gave 50 or 500 sq. miles in Idaho to China? Really?!
He‘s importing Somali’s? Seriously? Anyone doing background checks?
Cutting defense?
Pulling our troops out early and bringing them back to a non-existent job market. (That’s how we thank our Warriors.)
Question!
What sounds more likely..
Best case scenario or Worst case scenario? ……. (that was a rhetorical question.)
Birth Pangs!!
THANK GOD THAT JESUS IS COMING. SOON. ;D
Report Post »… then, they can have this place! ha ha!! L@them!
IAMNOTKNOWING
Posted on August 1, 2011 at 5:45pm“By his cunning, he SHALL make deciet prosper in his hand.”
… “He who understands riddles/dark secrets-sentences.”
Our so-called president is led by the Devil.
We watch, and we watch. We think that Obama has gone too far and that he’s finally exposed… and then he slithers out successfully and with even more power.
Thank God that He’s in control of everything.
Obama is neither a christian or a muslim.
I‘d wager that he’s more like his mom, an atheist.
Read II Thesalonians ch. 2 if you want to know who he really is.
… “opposing every object of worship and exalting himself above every so-called god, even taking his seat in the temple of God.”
Just watch two things: Obama and Israel.
Watch these 2 also: Putin winning the election in Russia next March and the Pope’s health.
(Not to offend Catholics.. the next Pope is the last Pope. “The Malachi prophecies.” The next Pope won’t believe in Jesus. He’s the False Prophet.)
It’s getting interesting!!
Report Post »old white guy
Posted on August 1, 2011 at 6:58pmthe opportunity was there to stop the madness but it is business as usual in washington. anyone who thinks you are going to fix this at the ballot box is a fool. that applies to all who think that you can vote this away.
Report Post »Michael
Posted on August 1, 2011 at 4:18pmObama’s 2012 reelection campaign page is already trying to capitalize on the debt crisis…the man has no shame
Report Post »IMPEACHBHO
Posted on August 1, 2011 at 5:10pmno honor, no honesty, no integrity, no love for this country, no tolerance for whites, etc., etc., etc.,
Report Post »IAMNOTKNOWING
Posted on August 1, 2011 at 5:47pmSay it with me, …..
Aaaaaannnnnntiiiii-Chhhrrrriiiiiiiiiist.
Report Post »olddog
Posted on August 1, 2011 at 4:17pmBoehner is doing absolutely the Best job he’s capable of, unfortunately that is Not enough. Put Rubio in Boehner place and we will save this country… God I have voted republican my entire life, but never again. I am a conservative and until I die I will vote conservative. Too many of the old guard in politics have totally forgotten what conservative means….
Report Post »Chet Hempstead
Posted on August 2, 2011 at 5:30amMarco Rubio can’t take Boehner’s job because he’s not a member of the House, he’s a Senator
Report Post »Uncurable wound
Posted on August 1, 2011 at 4:16pmGod please Curse all RINOs,this I pray…
Report Post »cloudsofwar
Posted on August 1, 2011 at 4:15pmyou don’t want to wake up yet, go back to sleep. oh they’ll going to love it when they wake up. says the Socialist. this Debt fiasco might have been our last chance.
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:22pmSorry, I think it was all over long before this. This is all just politics at its worst. We are BANKRUPT!!
There has never been any real doubt as to what would happen with this “deal.” All a distraction! How much has been going on behind closed doors while the media has kept our attention focused on this? Sadly, we will find out before long. I guarantee it will involve losing more rights and becoming more enslaved to the almighty State.
Report Post »olddog
Posted on August 1, 2011 at 4:11pmBachman Still Standing Tough on raising debt, and she still has our vote for a real president of this country… America we have no other option than Tea Party people in government….
Report Post »SPOT_OF_TEA
Posted on August 1, 2011 at 4:18pmList of people I can trust what they say is what they really believe:
Michele Bachmann
Sarah Palin
Rush Limbaugh
Glenn Beck
Thats all.
Report Post »Uncurable wound
Posted on August 1, 2011 at 4:23pmWe have no voice
We have no vote
We must pray
For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms.
Report Post »Ephesians 6:12
stinkybisquit
Posted on August 1, 2011 at 4:10pm2014, when Obamacare kicks in. TO appear that it doesn’t cost as much as it will.
Report Post »IMPEACHBHO
Posted on August 1, 2011 at 5:11pmObamacare must be destroyed or it will destroy the U.S., FACT.
Report Post »jjoy
Posted on August 1, 2011 at 4:09pmAnother “sell out” by boehner and his rinos…
How long are we going to put up with this kind of cr@p???
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:25pmUntil it all comes crashing down, as it inevitably will. We have been putting up with this for decades and will continue to do so. We get outraged. We threaten. We vow to boot the rascals out. Then we continue to allow it to happen. How are we going to put an end to it? By voting? Armed rebellion? Refusing to pay taxes? No, we’ll just keep doing what we always have.
Report Post »progressiveslayer
Posted on August 1, 2011 at 4:08pmThis is shocking spending cuts won’t kick in until 2014? of course they won’t if ever,these politicians are morally and financially bankrupting us.Most of them believe there’s an endless money supply,I think
Report Post »very soon the sheep and politicians will see there isn’t.
Bullwinkle
Posted on August 1, 2011 at 4:27pmDo you really suppose those cuts will actually be made, even then? (Love the screen name!)
Report Post »SPOT_OF_TEA
Posted on August 1, 2011 at 4:08pmThe first thing that needs to be done after this scam is behind us is for the conservatives in the house to replace Boehner as speaker with someone we can trust…Seriously can anyone say they can believe anything he says?
Report Post »showmerancher
Posted on August 1, 2011 at 4:04pmOf COURSE they won’t start until 2014. Congress needs some time to get those cuts reversed with new bills to substitute the cuts with tax increases!
Actually, it’s the ultimate Congressional non-solution. We go $2.1 Trillion more in debt, are promised spending cuts/tax increases in the future (half of which will probably come true… wonder which half?), and we managed to put ourselves in position to get the “Armageddon” of a credit downgrade without even having to default on the debt.
It’s the perfect bill for the no self-respecting Congress person. Should be close to unanimous.
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:29pmYou are so right. Nothing has been done that hasn’t already been done by the last upteen Congresses. What exactly is so “historic” about all of this, other than the amount of debt?
Report Post »2smart
Posted on August 1, 2011 at 4:03pmThere aren’t going to be any spending cuts. Don’t be deceived by these clowns. They haven’t shown any propensity to cut in the past, they’ve made tons of promises but it never seems to happen. But if this passes we WILL have a debt of over $17,000,000,000,000.00. And I will also bet that the credit agencies will downgrade our rating. The last two weeks have been total politics and show and will do nothing to cut spending.
Report Post »Matlor
Posted on August 1, 2011 at 9:33pm@2Smart
You NAILED it right on!
Report Post »THX-1138
Posted on August 1, 2011 at 4:02pmAnyone here ever play Three Card Monte?
I need a bumpersticker…
Report Post »“Republicans: The Other Left Wing”
tbconrad
Posted on August 1, 2011 at 4:09pmI agree. We need to replace some more professional politicians this coming year, Republicans and Democrates. If I did my job like they did theirs I would be unemployed
Report Post »code green
Posted on August 1, 2011 at 3:59pmGet that old school Boehner and the rest of the old establishment eunichs out of congress.
Report Post »I really didn’t expect to see the repubs roll over onto their backs and pee on their bellys this time.
A disgusting show
hauschild
Posted on August 1, 2011 at 3:58pmI could only make it thru the first sentence without throwing up in my mouth.
“The first phase of a deal to raise the government’s borrowing limit would pose little threat to the economy in the short term because almost none of the spending cuts would occur before 2014.”
So, this author equates spending cuts to potential short term disruptions in the economy, yet the increased spending without the ability to pay for it somehow helps the short term economy?
These people are frighteningly clueless.
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:32pmAs if anything could “threaten” the economy of a bankrupt nation! All smoke and mirrors so we don’t see what else is going on.
Report Post »Jack2011
Posted on August 1, 2011 at 3:57pmFar too little too late.
SCAM
Report Post »LOJ
Posted on August 1, 2011 at 3:56pmThis would be after the 2012 election too, after Obama thinks he will be elected and create more havoc. We need more than a bandaid here. Does anyone realize that the cuts that will be implemented will further hurt the economy, but we are going to have to brace ourselves for tough times and vote these irresponsible people out of office in 2012 to get this country back on the right track, it will take committment and sacrifice by all of us, Sad but True.
Report Post »hauschild
Posted on August 1, 2011 at 3:54pmI’m shocked.
Report Post »Okie from Muskogee
Posted on August 1, 2011 at 3:54pmI think I just heard Paul Ryan say on Fox News these are real cuts and they will spend less then last year….That is a lie.
Blatant lies!
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:40pmLiars will lie!
Report Post »Psychosis
Posted on August 1, 2011 at 3:54pmsmoke and mirrors
the only way we could possibly get a handle on this government is if we toss all the lifers out on their butts in 2012
we need a complete win in 2012……………………..20 new tea party congressmen to replace the dem members, and a replacement of republican congressmen ……………the ones that are up for election
plus adding 100 or more new members in the house to replace dems and rinos to boot
what would the dems and repubs think if we completely wiped out any majorities in both their parties in 2012 ????
think they would get the message ??? or keep claiming the tea party is just a fad ?
Report Post »teapartyconservatism
Posted on August 1, 2011 at 4:54pmLets find out.
Report Post »creativeogre
Posted on August 1, 2011 at 3:52pmListening to the debate on the Senate floor, and of Congress… Sounds like this entire “Deal” is going to tank (as it should ) .. meanwhile, the 6 men in the room, and the WH are boasting of success, and the media raving over it…
This is going to get ugly…
Never before has such a deep division fueled by the Media and outside interests created such a paradox in Washington.
Report Post »NOBALONEY
Posted on August 1, 2011 at 3:51pmIs anyone really surprised at this? Remember the 38 billion in cuts deal in april that turned out to be 300 million. Watch the other HandS!
Report Post »teapartyconservatism
Posted on August 1, 2011 at 3:48pmThis proposed debt bill is nothing more that economic subversion. No sale, just sell outs!
Here’s the best debt solution! Proposed by Congressman Ron Paul, MD, Lt Col, USAF, Ret., it’s both ingenious and just plain common sense.
The Federal Reserve is holding nearly two trillion dollars of recently acquired Treasury bonds, representing money that the government essentially owes to it’s self and therefore can easily be dissolved to solve the current crises.
“Here’s the plan in a nutshell: Out of the current $14.3 trillion federal debt we keep hearing is rapidly approaching the congressionally approved borrowing limit, over $1.6 trillion of that sum is money you and I “owe” to the Federal Reserve…”
“Paul, chairman of the House Financial Services Subcommittee on Domestic Monetary Policy and arguably more knowledgeable about monetary policy than any other member of Congress, says just don’t pay it back, because it’s not a real debt.”[1]
Except for Paul, politicians avoid the real cause of our economic problems, which is not the debt ceiling but the Federal Reserve. It’s caused a century of turmoil including the great depression and a 95% devaluation of our once ‘good as gold’ dollar, now replaced by fiat Federal Reserve notes.[2]
1. Kupelian, “Why are we ignoring simple, painless debt solution?,” WND, 7/28/2011.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=327389
2. Griffin, The creature from Jekyll Island: a second
Report Post »Bullwinkle
Posted on August 1, 2011 at 4:57pmAbsolutely correct! Paul has been maintaining this same position for as long as he’s been in Congress. Until you deal with the cause you won’t find a solution. Further proof that those in power are doing this with malice aforethought.
Report Post »HKS
Posted on August 1, 2011 at 3:48pmSounds like a slick willie move to me, he’ll be gone before the dust settles and can keep spending his ass off.