The deal to cut more than $2 trillion in government spending over the next decade and extend the government's ability to borrow until at least 2013 has been signed, sealed, and delivered. So what was all the fuss about? And what was really gained by this polarized government brinksmanship?
The debt ceiling debt debate over the last few months achieved one unintended goal. It surfaced a sleeper issue with the American public to raise the importance of our country’s out of control debt and unsustainable entitlement programs. Politicians on both sides of the aisle have talked about addressing the problem for a long time, but this has forced the country to face this problem head-on.
The agreed upon bill will cut spending slightly in the early going; which is certainly better for the fragile state of the recovery. The spending cuts will begin with just $25 billion in 2012 and $46 billion in 2013. This is the tightrope that legislators walked while attempting to form this bill, as economists weighed in that cutting any spending could reduce US GDP (a measure that is already quite low signaling potential sluggish economic growth).
While everyone seems to agree that government debt and spending are out of control, agreement on where to make significant enough cuts to actually impact debt remains unseen. Major expenditures of Medicare and Social Security, as well as national security seem to be areas that the average American does not want disturbed, but these also remain major weights to the ballooning debt. It may be clear that we need and want smaller government, but achieving that may be more painful than we want.
The next step in the debt debate will be the appointments made to the bi-partisan super-committee in Congress, and what potential plans can be agreed upon heading into a presidential election year.
