POLITICAL SPEECHES & DOCUMENTS
THE HEADLINES: DEBT CEILING SHOWDOWN:
Myths and Facts About the Debt-Ceiling Compromise
The budget compromise removes the cloud of uncertainty over the economy, and takes important steps toward reducing our deficit. In that sense, it’s a win for all Americans. (A picture is worth a thousand words, so click here to see an infographic on exactly how this agreement will work going forward.)
Here at the Office of Public Engagement, we’ve been working overtime to help explain all the details of this deal – and why we think it’s a win for our shared agenda. We also know that in the rush to figure out exactly what the deal is all about, there has been a lot of inaccurate information and analysis.
Below, I’ve tried to address, head-on, some the most common misconceptions we’ve been hearing about the deal.
Myth: President Obama caved.
Fact: President Obama laid out key priorities that had to be part of any deal. Those priorities are reflected in this compromise. First, we avoided default which would have plunged the economy into a deep recession, imperiling the well-being of millions of Americans. Second, the initial down payment on deficit reductions does not cut low-income and safety-net programs such as Medicare, Medicaid, and Social Security. Third, we set up a path forward that will put pressure on Congress to adopt a balanced approach. And finally, we raised the debt ceiling until 2013, ensuring that House Republicans could not use the threat of default in just a few months to force severe cuts in Social Security, Medicare, and Medicaid.
Myth: Republicans got everything they wanted
Fact: They won’t admit it publicly, but when push came to shove, Republicans backed down on their key demands. For months, Republicans called for a budget that would have ended Medicare as we know it, made catastrophic cuts to Medicaid, or cut investments in education by 25 percent, clean energy by 70 percent and infrastructure spending by 30 percent. As if that wasn’t enough, they also demanded that we repeat this debt-ceiling crisis, just a few months from now.
None of these of these demands made it into a final deal.
Myth: This deal cuts Medicare, Medicaid, and Social Security.
Fact: There are no changes to these programs included in the initial phase of this agreement. In the second phase of the agreement, everything will be on the table – and the President has made clear that the committee must pursue a balanced approach where reforms to programs like Medicaid, Social Security or Medicare would only be acceptable if coupled with higher revenues from the most fortunate.
Myth: This deal reduces the deficit entirely on the backs of the middle class.
Fact: While the initial down payment on deficit reduction – about $1 trillion – will require belt-tightening, it still will allow us to invest in the programs and priorities we care about most. Moreover, hundreds of billions of this initial round of cuts will come from security spending.
As we negotiated the domestic side of the cuts, we protected our historic new investments in Pell Grants as part of the down payment. For the second phase, we made sure that programs for the most vulnerable, like food stamps, Medicaid and the Earned Income Tax Credit, would not be hit by the “trigger,” the automatic cuts that will go into place if Congress does not find an acceptable compromise.
Myth: The joint committee — the so-called “super committee” — makes it easier for Congress to cut the programs we care about.
Fact: The joint committee system puts pressure on Republicans to seek compromise. As we all know, in this round of deficit reduction, there wasn’t a lot of leverage bringing Republicans to the table. In round two, that changes.
If Republicans aren’t willing to compromise, then the joint committee will fail. This would automatically trigger an additional $1.2 trillion in deficit reduction designed to be painful for both sides, with half that coming from savings in the defense budget.
Myth: Since we weren’t able to raise revenues right now, we won’t be able to raise revenues in the future.
Fact: The deal lays out two paths for further reducing our deficit. Both of them include revenues. Option one is for the joint committee to develop a plan that is passed by both Houses of Congress, and signed by President Obama. The President has already said that he will only support a balanced approach involving shared sacrifice. That means raising revenue through steps such as closing loopholes for corporations, reforming our tax code, and asking millionaires and billionaires to pay their fair share in taxes.
If the joint committee cannot develop a balanced compromise,that brings us to option two for raising revenues: the expiration of the Bush tax cuts. On January 1, 2013, President Obama can use his veto pen to end special tax breaks for high-income Americans if Congress votes to extend them.
President Barack Obama signs the Budget Control Act of 2011 in the Oval Office, Aug. 2, 2011. (Official White House Photo by Pete Souza)
All About the So-Called “Super Committee”
Tuesday’s budget compromise creates a joint committee of Congress, which you might have seen referred to as the “super committee.” This committee is responsible for developing a bipartisan plan for reducing our deficit by $1.5 trillion over the next 10 years. (That’s on top of about $1 trillion from the down payment that was included in the first phase of the deal.)
At the White House Office of Public Engagement, we’ve been getting a lot of questions about exactly how the joint committee will work. We’ve created an infographic that illustrates the process, but I’d also like to answer a few of those questions below.
Q: Who’s on the joint committee?
A: Six Democrats, and six Republicans. Each of four party leaders in Congress will choose three members of the committee, so half will come from the House, and half from the Senate.
Q: As the joint committee comes up with a plan, what’s on the table?
A: Everything. The joint committee has no restrictions on where it can find ways to reduce our deficit. It can eliminate tax loopholes, just like it can cut spending. President Obama believes that the committee should listen to the vast majority of Americans who support a balanced approach that includes revenue.
Q: The first round of deficit reduction was made up entirely of spending cuts. Will the second round be as well?
A: The short answer is no. The Committee can look at the entire budget including revenue and entitlements. And the President has made it clear that he will only accept a balanced approach.
Q: Republicans have refused to support a balanced approach in the past. Why would they support one now?
A: The threat of allowing our nation to default gave Republicans a lot of leverage in the first round of negotiations. In the second round, that changes. First, if the joint committee doesn’t come up with the kind of approach both parties can support, it sets up a “trigger,” something Democrats and Republicans both want to avoid. (I’ll explain the trigger in more detail below.)
Second, the Bush high-income tax cuts are set to expire on January 1, 2013. This forces Congress to deal with this issue, and if Congress does vote to extend these special tax breaks, the President can use his veto pen to end them. This gives Republicans added incentive to compromise on an approach that balances spending reductions and closing tax loopholes.
Q: When the joint committee comes up with its plan, what happens next?
A: If seven out of the 12 members of the joint committee approve a plan, it moves to a straight up-or-down vote in Congress. No filibusters, no amendments, and no procedural tricks. If Congress approves the plan, and President Obama signs it, it goes into law.
Q: What happens if the joint committee can’t reach a deficit reduction agreement that passes Congress?
A: If the joint committee can’t come up with a plan that the Senate, the House, and President Obama can all approve by January 15, 2012, it automatically sets off what’s known as a “trigger.” This trigger puts pressure on both sides to compromise, because it would make cuts that would be painful for Democrats and Republicans alike – half the cuts would come from domestic programs, and half from defense.
However, President Obama made sure that Medicaid, Social Security, and Medicare benefits would not be cut in the event that the trigger is set off. Neither would programs for the most vulnerable, such as food stamps and the Earned Income Tax Credit.
Q: The President says he wants to see a balanced approach. What exactly does that look like?
A: A balanced approach means that everything is on the table, and everyone pays their fair share. This could include reforms to programs like Medicare, so they will be around for the next generation. But that would also require asking the most fortunate to do their part: closing loopholes in the tax code, ending wasteful subsidies to corporations, and asking millionaires and billionaires to pay their fair share.
Polls have consistently shown that the majority of Americans support the President’s call for balance and compromise.
Q: What can I do to make a difference?
A: During this debate, President Obama asked the American people to urgeWashington to put partisanship aside, and make the tough choices that are best for the country. Your voice made a huge difference in protecting programs like Medicaid, Medicare, and Social Security during the first stage of this deal.
If you agree with President Obama – if you support a balanced approach – don’t stay silent on this issue. If you want to see Washington compromise, put politics aside, and ask all Americans to pay their fair share – then make your voice heard.
And stay in touch with the Office of Public Engagement! Visit Whitehouse.gov/engage to learn how Americans from all over the country are changing the way Washington does business, both in this debate, and on a wide variety of other issues.
Related: Jon Carson addresses the myths and facts about the debt-ceiling compromise