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The Next Steps on the Debt Deal

Progressives, Take Heart

SOURCE: AP/Susan Walsh

President Barack Obama delivers a statement in the Rose Garden of the White House Auggust 2, 2011, following the Senate's passing of the debt ceiling agreement.

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As might have been predicted months ago, the great debt ceiling fight did not end with a resolution of the major policy issues dividing Washington. Agreement was reached only on a complicated series of political steps that allow the U.S. Treasury to borrow the money necessary to pay the bills over the next two years. Beyond that there was little that was agreed to.

Consider first nonentitlement spending. Two-thirds of the federal budget is simply checks that go out each month to retirees, health care providers, bond holders, and state governments. The money to run the 15 departments and the dozens of federal agencies that we normally think of as the federal government actually accounts for only a third of the spending, but that is where all of the first tranche of cuts comes from. The agreement will force Congress to cut 1 trillion from those programs over the course of the next decade.

Most of the trillion dollars in savings claimed by the agreement, however, are scheduled to occur in the later half of the decade. Whether those are actually enacted will depend on how future Congresses and presidents regard the deal that just became law and will be subject to change during each annual budget cycle between now and 2021.

But while the agreement may not deliver cuts as deep as it appears to promise over the long term we are likely to see even deeper cuts than the plan requires in the near term. It caps spending in 2012 at a level that is about $59 billion higher than the House Budget allocations, and gives House Republicans the latitude to move away from the draconian cuts they are currently making in programs such as food safety, space exploration, highways, biomedical research, and education. But there is no evidence whatsoever that the Republicans will use that latitude to make restorations.

As a result, we will almost certainly face a fight in late September when current year funding for the government expires and Congress will need to send the president a new continuing resolution setting temporary spending levels for fiscal year 2012 beginning in October. If what we witnessed this spring is any indication, Republicans will use this opportunity to force additional retrenchments in activities and services governmentwide.

Similarly, there was no resolution on entitlement spending (Medicare, Medicaid, Social Security) or taxes. That can was kicked down the road to be worked out in a new congressional supercommittee made up of three Democrats and three Republicans from each party of each chamber. By November 23 they are to report legislation that will cut deficits over the next decade by an additional $1.5 trillion. If they fail to reach agreement on such a package ominous sounding cuts will be extracted equally from defense and nondefense programs—assuming future Congresses decide such cuts would not be a good idea.

The bottom line here is this—the debt ceiling may have been extended for another 18 months but nearly all of the other issues are still on the table. They will be the focus of intense public debate in the months ahead.

That may sound like bad news to progressives or anyone that believes government plays an important role in fostering economic growth and social cohesion. There seems little question that such people had their brains beaten since the Tea Party came to town last November. But there is no reason for the one-sidedness of that battle to continue. In fact, there is a lot of evidence that the battle is entering the stage that progressives can get the public—and in particular independent voters—to focus on the real choices that society must make in the months and years ahead. Once that happens the debate could move in an entirely different direction.

First of all, there is an extended opportunity to explain the impact of the proposed cuts in a variety of government programs—not programs aimed at reducing the suffering of a dispossessed few but popular programs essential to a broad majority of the nation’s voters. That dialogue began last spring when Republicans proposed deep cutbacks in food safety efforts, clean water programs, and every type of transportation from better highways to air traffic control. But it takes more than a few months for the reality of the policies being discussed in Washington to really sink into the consciousness of ordinary voters, especially amid what has seemed like an interminable debate over abstract questions about the appropriate size and role of government.

But going forward, this is actually an opportunity to insure that everyone has a chance to join the conversation. Polling indicates that will be good for progressives. While voters dislike spending in general and a few programs in particular—think foreign aid and farm subsidies—they actually very much like most of what government does when the conversation gets down to specifics.

Second, the showdown that the debt deal forces on entitlement spending versus tax cuts needs to be defined sharply and deftly. Most people don’t want higher taxes even if they are to be paid by someone other than themselves. But if higher taxes will prevent substantial erosion in the coverage provided under Medicare, a delay in eligibility for Social Security, or maintaining current quality in nursing home care under Medicaid then large majorities will have a very different view of taxation.

To date there has been no forum in which these tradeoffs in budget policy could be clearly and understandably presented. Now one exists.

Finally, it is hard to change people’s minds when you don’t have their attention. For most of the past decade, federal budget policy ranked near the bottom of any list of topics that most of the citizenry was interested in hearing about. That’s now changed. Retired federal workers (including those who once considered themselves Tea Party sympathizers) are now focused like a laser beam on the next phase of the budget negotiations. So are teachers, rocket scientists, law enforcement agents, government contractors, military families, road builders, nursing home operators, airline executives, mayors, and Mississippi barge operators.

There has never been a better time to talk to the public about the budget.

Despite these considerable advantages progressives are unlikely to make much progress unless they have a clear message and are willing to repeat it as often as it needs to be heard. We have done a miserable job in the message war thus far, but passage of the debt ceiling opens a new chapter in the ongoing battle over priorities. We can win this round if we get our act together.

Scott Lilly is a Senior Fellow at the Center for American Progress.

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