Boehner folds, gives Obama $2.4 trillion debt increase in exchange for $40 billion in phony spending "cuts"

Wow. Just wow. It is scary how predictable these politicians are. A month ago, I wrote:
Boehner and the Republicans will talk tough all the way to the brink, then fold like a cheap suit and accept a deal that has something like $2 trillion in alleged spending cuts over ten years, all of which will be back-end loaded meaning no significant cuts before Election 2012, and which will not put the country on a fiscally sustainable path.

Let's break that down in light of tonight's deal:

- "will talk tough all the way to the brink..." Check. They went way past Obama's phony July 22 deadline, and stopped just two days short of Geithner's phony default threat.

- "then fold like a cheap suit..." Check. It doesn't get any cheaper than the lime green polyester leisure suit that Boner just bought.

- "something like $2 trillion in alleged spending cuts over ten years..." Check. There are allegedly $2.4 trillion in "cuts," though spending increases every year and these "cuts" are from a phony ever-increasing "baseline."

- "all of which will be back-end loaded meaning no significant cuts before Election 2012..." Check. Even under the phony baseline budgeting, "cuts" before Election 2012 number in the tens of billions out of annual $1.5 trillion deficits.

- "and which will not put the country on a fiscally sustainable path." Check. Even the pollyannas at Moody's and S&P said we needed $4 trillion in alleged cuts to be credible, and this deal doesn't come anywhere near that target.

I wish I was wrong, but that prediction from last month absolutely nailed every single aspect of this pathetic deal.

Let's take a quick spin around the financial web for reaction.

Zero Hedge: "Hank Gave Us A 3 Page Term Sheet; Boehner Gives Us A 7 Slide Powerpoint"
[...] there will be no cuts for the immediate future. But there will be a single $2.4 trillion debt ceiling raise (based on a Joint Committee green light, LOL) just as Obama desired. And of course, there will be no tax hikes. Bottom line: there will be about $40 billion in actual, real spending cuts until the next, $16.7 trillion debt ceiling limit is hit some time in Q1 2013, at which point it will have to be raised to $20+ trillion. But no really, they are cutting spending and all that.

Market Ticker: Republican "Mainstream" Self-Destructs
[...] what it does is:

* Lie once again about "cutting spending." It does no such thing. It increases spending - every year. Bogus and outright-fraudulent "baseline budgeting" means that if they intended to boost spending $300 billion but only increase it $200, that's a $100 billion "cut." If you ran your household like this you'd be broke in a week. For the US, it will take a bit longer.


* The cuts, fraudulent though they are, aren't even real anyway - and not binding either. There's nothing before 2013, which means a downgrade is almost certain. Further, raising the debt ceiling now for the whole [amount] but allegedly finding the "cuts" over 10 years is an outright fraud by a ratio of 10:1.

* A 2013 timeline for actual changes means nothing, since the next Congress is not bound by what this one does. Period.

Boehner needs to be ejected from Congress in the next election, and the remaining "mainstream" Republicans must go with him, along with any claiming to be "Tea Partiers" who vote for this abortion.

Mish's Global Economic Trend Analysis: Futures Surge on "Pathetic" Debt Deal; Congress Should be Ashamed; US Deserves Debt Downgrade
This is a pathetic deal. It's no wonder futures are rallying. My dead grandmother could find more cuts than this. The S&P, Moody's, and Fitch should all downgrade US debt on this deal.

$1 trillion up front and promises to cut another $1.5 trillion is the wimpiest of wimpy deals. The deficit is 1.4 Trillion. The immediate cut is a back loaded $100 billion. Then there is a possibility of another $150 billion back loaded cuts.

Anyone voting for this monstrosity should be ashamed.

This is not what we elected the Republicans for.

1 comment:

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