As I have posted below, it should be noted this "reduction" in the deficit is against an accelerating baseline that will result in an increase in the deficit of $7 trillion plus over the next 10 years. Further, the baseline doesn't take into consideration the likelihood that interest rates will be much, much higher. Finally, the "bipartisan committee" tasked with identifying an additional $1.5 trillion in deficit reductions, including from entitlement and tax "reform", is a super-Congress.
- Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
- President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
- Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
- Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.
Bottom line: The deficit deal is about smoke, mirrors, growing government and Ben Bernanke being required to print trillions in new money.