Conservative Analysis of the Deal to Raise the U.S. Debt Limit

     Although it is not good for the United States to raise its $14.3 trillion debt limit and continue its pace of far too much spending, for the first time the increase in the debt limit will now be offset with spending reductions, without any tax increases because of the bipartisan debt limit deal approved by both houses of Congress.

     These initial spending cuts of over $900 billion over ten years will occur mostly in discretionary spending, not defense or entitlements. In fact, these cuts total slightly more than the amount of spending they offset. Because a current Congress cannot bind future Congresses, oftentimes in such deals the spending cuts never occur. Therefore, it is significant that in this deal, over $60 billion in cuts will take place during this Congress.

     President Barak Obama and the liberal Congressional Democrats had insisted on an increase in the debt limit without any strings. Then, once Congressional Republicans acted on the mandate given them in the 2010 Elections, Obama and the Democrats in Congress retreated from their initial position and began insisting that any spending reductions be matched with tax increases. Despite controlling only the House of Representatives, the Republicans were successful in obtaining the offsetting spending cuts they had sought without any tax increases, as Obama and the liberal Congressional Democrats were forced to give into popular pressure and avoid reaching the debt limit.

     Reaching the debt limit would not have necessarily led to a default on the public debt, as there was sufficient revenue to pay the interest and allow the redemption of bonds, but would have forced the Administration to make cuts to discretionary spending that had been authorized by law and which Obama did not want. Therefore, using the debt limit increase as a means to force a bipartisan agreement on spending reductions was an effective strategy on the part of Congressional Republicans.  The role of the Tea Party in this deal was indispensable.

     As a bonus for conservatives, the deal includes a vote on a Balanced Budget Amendment to the U.S. Constitution. An incentive for Congress to pass it and send it to the States for ratification is also included in the deal, as passage of the Amendment by later this year would avoid painful triggers of automatic spending reductions to defense and entitlements beyond what either party wants. Over the next few months, conservatives must call upon Congress to pass the popular Balanced Budget Amendment. Nearly every state already has such requirements in its own constitutions.

     If the painful triggers can be avoided through a Joint Committee’s recommendations for spending reductions, then another round of at least $1.2 trillion in spending cuts will further offset the deficit spending.

     Although there are some dangers in the deal, overall it is a conservative victory. It does not go nearly far enough to reduce the public debt, but it is a significant first step in that direction. Importantly, conservatives have seized the debate by focusing on spending cuts instead of tax increases. The deal recognizes the important principle that the reason the growth of the debt has been increasingly rapid is because of too much spending, not insufficient taxation. 

     Without this deal, the debt would have increased by over 2 trillion dollars more than it otherwise would have. Now is the time for conservatives to maintain the momentum they have gained toward balancing the budget and reducing the debt by reducing spending even further without raising taxes.