Debt Ceiling Deal Outrages Some Environmentalists
WASHINGTON, DC, August 1, 2011 (ENS) – The House of Representatives today passed a compromise bill to raise the U.S. debt ceiling and make deep cuts in spending. A majority of House Republicans, and about half the Democrats approved the package, just a day before the deadline.
Treasury Secretary Timothy Geithner has said that the debt ceiling must be raised by August 2 to avoid defaulting on bills that will come due on August 3.
The U.S. Senate will vote on the bill Tuesday. The measure will need 60 votes to pass the 100-seat body, said Senate Majority Leader Harry Reid. If it passes, President Barack Obama said he will sign it into law.
President Barack Obama announces a compromise on the debt ceiling, July 31, 2011 (Photo courtesy The White House)
Last night, after weeks of high-tension talks, President Obama and congressional leaders agreed to the compromise which would increase the debt ceiling to a level that will allow the nation to meet its obligations through the beginning of 2013.
President Obama said, “The first part of this agreement will cut about $1 trillion in spending over the next 10 years – cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President – but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.”
The deal, which includes no increases in taxes or revenue, has prompted fear among some environmentalists that spending cuts would harm public health and that in the end, big, profitable oil companies would keep their existing government subsidies.
Friends of the Earth said, “The deal calls for deep cuts that will hurt poor and middle class Americans and undermine our government’s ability to enforce crucial environmental laws. The deal does nothing to make oil, coal and other polluting corporations pay their fair share, and it leaves the billions in giveaways they receive untouched.”
“The deal is likely to further weaken our economy, put more people out of work, slow down a transition to a clean energy economy and lead to more Americans drinking poisoned water and breathing polluted air,” the environmental group warned.
Oil refinery on the Mississippi River, March 2011. Environmentalists and many Democrats object to government subsidies for oil companies. (Photo by Rob Weir)
The compromise bill would enact 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction, balanced between defense and non-defense spending.
President Obama is authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
The bill also creates a bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform.
The committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to take an up or down vote on committee recommendations by December 23, 2011.
An enforcement mechanism is established to force both parties to agree to balanced deficit reduction. If the committee fails, the enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending.
The enforcement mechanism protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.
President Obama said, “In this stage, everything will be on the table,” including tax increases and spending cuts.
“Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions,” said Obama. “Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.”
“Over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job,” Obama said.
The debt limit is the total amount of money that the U.S. government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
Previous budget decisions include a massive tax cut for the wealthy, two major wars and the effects of a major recession. The so-called “debt crisis” has little to do with out-of-control spending by the Obama administration, as Republicans have claimed.
Senator Reid, a Nevada Democrat, said, “Sometimes it seems our two sides disagree on almost everything. But in the end, reasonable people were able to agree on this: the United States could not take the chance of defaulting on our debt, risking a United States financial collapse and a world-wide depression.”
“To pass this settlement, we’ll need the support of Democrats and Republicans in both the House and Senate. There is no way either party – in either chamber – can do this alone. As President Lyndon Johnson said, ‘There are no problems we cannot solve together, and very few that we can solve by ourselves.'”
“I know this agreement won’t make every Republican happy. It certainly won’t make every Democrat happy, either,” said Reid. “Both parties gave more ground than they wanted to. And neither side got as much as it had hoped. But that is the essence of compromise. And the American people demanded compromise this week.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said, “At this point I think I can say with a high degree of confidence that there is now a framework to review that will ensure significant cuts in Washington spending. And we can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations.”