So after all of the drama, it’s over. For now.
President Obama has signed into law legislation that will raise the debt ceiling, averting what many in Congress and the media had led us to believe was very nearly the end of the world. The measure, which passed yesterday in the House by a vote of 269-161 (see how your Representative voted here), overwhelmingly passed in Senate earlier today by a vote of 74-26.
What does it mean? It means that tomorrow, when we wake up, the birds will be singing, the sun will be shining and all will be right with the world.
Or not.
Here’s what it really means:
- President Obama has the immediate authority to raise the debt ceiling by $400 billion. That should get us through until the next fiscal year begins. Of course, with those kinds of dollars, that must be eons away… or September 2011. I’m not kidding.
- Since $400 billion isn’t quite enough headroom to avert another crisis next year/next month (same thing for fiscal purposes), President Obama has been authorized to raise the debt ceiling by another $500 billion in the next fiscal year. That authorization is subject to approval from Congress (or, as the legislation so beautifully describes it, they may offer “a joint resolution of disapproval”). And that approval is subject to a veto by the President. Which means that the next boost in the debt ceiling is a given.
- There will be immediate spending cuts. Lots of them. As a first step, there will be about $917 billion in cuts over the next ten years. The specifics are still up for debate.
- Medicare and Social Security will not be affected by the cuts.
- A special “super committee” consisting of members of Congress (which may or may not be constitutional depending on who you talk to and how they interpret these provisions) will meet in order to hammer out an additional $1.5 trillion in cuts. The cuts will be voted up or down before the holidays, thus ensuring that the holidays are going to stink for a lot of people.
- If the “super committee” cuts are approved, President Obama can raise the debt ceiling by an additional $1.5 trillion.
- If the “super committee” cuts are not approved, President Obama can still raise the debt ceiling, but only by an additional $1.2 trillion. However, that would result in across the board cuts split between defense and other programs unless some other as yet not agreed upon (even though we know what they’re really thinking) budget balancing measure can be agreed upon.
- There are still no immediate tax increases scheduled. But this will change. See #7.
- There’s no default. The markets won’t crash. Inflation won’t skyrocket. The dollar won’t plummet. And we don’t have to invade Canada. That said, a credit downgrade may still be coming which means I think someone may have to give up their Centurion Card.
- Nobody really won in this scenario. Not President Obama. Not Senate Majority Leader Harry Reid (D-NV). Not Senate Minority Leader Mitch McConnell (R-KY). Not House Majority Leader Eric Cantor (R-VA). Not House Minority Leader Nancy Pelosi (D-CA). And not Speaker of the House John Boehner (R-OH). And certainly not the American people.
Fun fact: I used the word immediate three times in my summary. Congress used the word immediate (or a variation, like immediately) seven times in the legislation (you can read the entire text here as a pdf). I guess if it’s written down, it conveys a sense of urgency.
Now that it’s all over (birds singing, remember?), Congress is hopeful that things will get back to normal. But judging from the public reaction so far, that’s not terribly likely.
