Bigger budget battles await

I think it was mainly fear of the American voters’ anger that prompted this weekend’s budget agreement, which kept the federal government open and which allowed 800,000 federal employees to go work as usual tomorrow.

It seemed to be a messy business right up until the end, but these kinds of things happen in democracies and this will happen again in America, where power is shared between a democratic president and a divided Congress.

But let us remember that the agreement to cut 38 billion dollars as about the current fiscal year, which is already over six months old, and that the cuts cover only one percent of the total budget. It’s really peanuts.

Still, everyone involved called the settlement a victory, except for a minority of the 87 Tea Party-members in the House, who wanted even greater cuts, and even at the risk of a federal shutdown. In a vote of protest, 28 of them said no to the deal, and were joined by 70 Democrats, who believed that Obama had gone too far in his willingness to compromise, particularly in today’s precarious economy.

President Obama and the Democrats could have avoided this conflict if they had acted before the November elections, when they had large majorities in both houses of Congress. But they never pushed for it, a failure for which they now had to pay dearly. There is no doubt that the new Republican majority in the House has led the budget debate since the election. Their original demand of 100 billion dollars in cuts became 38 billion. So they did not get everything, but they set the tone of the debate, drove the negotiations, while the White House and the Democrats remained largely passive, limiting themselves to reacting and commenting.

Nonetheless, Obama is seen as a victor — the pragmatist and mediator, who wanted to see results, wanted to make sure in the end that the government stayed open. He came to be seen as paving the way for the compromise, a compromise that the American electorate seemed to want — “they’re elected to make this kind of decisions”.

But new and bigger battles are waiting already this week – the raising the debt ceiling and next year’s budget. And now we are talking about real money, trillions of dollars. The debt ceiling at over 14 trillion must be raised otherwise a new recession could threaten, according to warnings from experts. But it is safe to say that a vote on the debt ceiling will come with new republican demands for budget cuts.

As to next year’s budget, there is a radical proposal by the chairman of the Budget Committee, Paul Ryan, who has proposed six trillion dollars in cuts over the next ten years with drastic changes and cuts in Medicare and Medicaid, while also cutting the taxes for the wealthiest and for corporations from maximum 35 to 25 percent.

The proposal has received scathing criticism, “a truly outrageous proposal”, writes EJ Dionne in the Washington Post. Still, the proposal is likely to be adopted this week by the Republicans in the House.

As to Obama, who already in February presented his budget proposal, which no one seems to have taken it seriously, he will this week present a series of specific proposals for cuts, as well as, once again, propose higher taxes for those who earn over 250,000 dollars a year.

Yes, a big battle is coming up, one which could decide next year’s presidential election.


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