Square labyrinth

Daley’s Glossary: Guideposts in the Labyrinth of our current Fiscal Debate

Listening to the current national fiscal debate is like standing before a labyrinth with only your ears to guide you. There are strange terms and “impending deadlines” being thrown out into the airwaves and the only things to be sure of– is the spot marked “you are here.”

Because the wonky debate inside the DC Beltway will be conducted in head-spinning clichés that the media like so much, I feel compelled to offer a brief series of definitions to clarify the situation and make our imperative clear:

We must continue to push cutting prescription drug costs and increasing taxes on Wall Street to fill gaps in the government’s revenues. We must continue to insist that there be no cuts to social insurance programs American families need for their security. Stay strong. This is an historic fight.

Glossary of Terms

“Fiscal Cliff.” This referred to the December 31st deadline when the Bush Era tax cuts were to expire, mandatory budget cuts were to occur, emergency unemployment benefits were to cease, etc.

“Sequester.” This refers to the deal that was made in 2011 that put into law mandatory cuts to both domestic and defense appropriations. Sequester was timed for January 1, 2013 and was supposed to drive your nations lawmakers to make a deal on future spending and taxes before that date.

“Debt Lid.” Unlike most other nations, the U.S. has a law limiting the amount of money the country can borrow. (Can also be interchanged with ‘Debt Limit”, “Debt Ceiling.) Driven by low revenues and increased demand for spending coming from the wars and the economic crash, the country is again going to hit this lid, perhaps as early as Valentines Day.

“Grand Bargain.” This refers to the intention of some, including the President, to try to wrap taxes, spending, entitlement “reform,” debt lids, and all the rest into a single package that quiets the fiscal debate, at least for a time.

The DC Labyrinth of Auditory Wonder

Armed with this common vocabulary, let’s take a peek at how the New Year’s Eve tax deal decided very little. The President did score an important victory about taxes on the wealthy. Some estimates are that the tax code is as progressive now as it was in 1979. This move to re-balance equity in the country is an important step.

Unfortunately, the deal on the “fiscal cliff”(see definition) raised less than half of the revenue the President originally had sought. The President had called for a “balanced” approach that raised revenues in the $1.4 trillion range. He actually got only $624 billion.

Two other things associated with the “deal” must be noted: First, there was no agreement on raising the legal debt limit; and second, the debate over spending and entitlements was pushed out for another two months.

These developments mean that the fight to protect the social insurance programs is about to intensify. Advocates for Social Security, Medicare and Medicaid are in for a rough go.

Remember the debt lid fight in 2011? The House Republican Caucus refused to raise the limit placed on the nation’s ability to purchase debt and thereby drove the downgrading of the U.S. financial rating before agreeing to a complicated scheme for mandatory cuts in 2012 called the “sequester.”(see definition)

Here we go again.

Many Republican voices in the House and Senate are saying that they are willing to hold the national financial reputation hostage in order to get major cuts to Medicare and Medicaid.

Since the “cliff” deal pushed the sequester back two months the fight over spending is set to take place at about the same time as the fight over the debt lid.

Something else took place around the “cliff” discussions. Pretty much everyone involved now is personally angry with pretty much everyone else. The House conservative wing thinks it got taken and is mad at both the President and Speaker Boehner. A weakened Boehner is saying that he will no longer talk to the President. In the Senate, Majority Leader Harry Reid was pushed aside by negotiations between Vice President Biden and Minority Leader McConnell. Reid cannot be too happy about that. There are a whole bunch of your national political leaders for whom this is all getting personal.

When high emotions get into these things compromise becomes infinitely more difficult – there will be no easy compromises going forward.

The President continues to pursue the “Grand Bargain”(see definition). To the President’s credit, his version of a plan insists on raising further revenues to balance cuts. However, those of us who oppose cuts to social insurance programs must be concerned that such an approach points directly at changes in Medicaid, Medicare and Social Security.

The conservatives will refuse to raise the debt lid until there are cuts to Medicaid and Medicare. Senate Minority Leader McConnell says that there will be no more taxes. Speaker Boehner links increases to the debt lid to dollar for dollar reductions in entitlements.

The media, intent on enjoying another DC crisis, will invent yet another cliché to describe the mess. (My own cliché is the Saint Valentines Day Massacre.)

Pundits will pontificate about the dire consequences while the political ideologues will continue to stand before the TV cameras saying stuff like “we don’t have a revenue problem we have a spending problem.” All this noise will drown out the voices of economists who suggest that cutting spending in a stagnating economy only will mean more stagnation.

It’s a mess folks.

As advocates we must continue a common and concerted push that revenue cannot be taken off the bargaining table. There cannot be a dollar-for-dollar exchange between vital services and raising the debt lid. The American people cannot afford any cuts to vital services. Congress needs to renegotiate and bring down the cost of prescription medicines as a major step to ending this fiscal debate.

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