Written by Tad DeHaven, a budget analyst at the Cato Institute. Posted with permission from Cato @ Liberty.
Speaker Boehner says that the House will not pass another increase in the debt ceiling unless the White House and congressional Democrats agree to cut spending by an equal or greater amount. That’s the same line in the sand that Boehner drew during the previous debt ceiling showdown in 2011.
As I noted in a recent piece, the 2011 agreement to increase the debt ceiling accomplished no such thing:
The deal that Republicans ultimately agreed to — The Budget Control Act of 2011 — promised to reduce the growth in spending over the next ten years by $917 billion. In exchange, the president got to increase the debt ceiling by $900 billion. According to the House Republican leadership, the trade was a victory because the debt increase was smaller than the spending cuts. Of course, that’s nonsense. Not only were there no real spending cuts, the federal debt has proceeded to jump another $1.8 trillion since the president signed the bill less than a year and a half ago.
The other part of the deal hasn’t turned out any better. The BCA created a “Super Committee”, tasked with achieving $1.2 trillion in deficit reduction over ten years. When the committee inevitably failed, the agreement stipulated that the deficit reduction instead be achieved through a combination of automatic cuts to defense and non-defense spending (“sequestration”). Republicans and Democrats promptly made it clear that they would figure out a way to avoid the spending cuts.
The sequestration spending cuts that Republicans and Democrats want to avoid allowed the president to raise the debt ceiling by another $1.2 trillion. In sum, the federal debt will have gone up $2.1 trillion in exchange for no spending cuts in the present and a promise toincrease spending at a lower rate over the next ten years.
There is zero chance that the Democrats would (or will) agree to a deal that seriously cut $1 for every $1 increase in the debt ceiling. Heck, I’d be shocked if a majority of Republicans would support it. The House Republican leadership obviously knows this—and it’s not like the GOP is prepared to “shoot the hostage” to begin with—so expect another debt ceiling increase with no substantive spending reforms.