The latest debt deal illustrates Congress’s utter inability to deal with the mess it has gotten itself into. As more and more Americans realize this, pressure will build for an interstate “convention for proposing amendments” to solve the problem. (The Constitution authorizes the state legislatures to force an interstate convention for this purpose.)
Here’s where the deal falls short:
* Cuts of $2.4 trillion over ten years—even if they actually materialize—will not substantially reduce the national debt. Best case scenario is that in 2021 the debt will be around $22 trillion instead of $24 trillion.
* Only $900 billion of the cuts are authorized now. They are not real cuts, but reductions in the rate of spending growth.
* The deal ends no significant programs, so program employees and lobbyists can continue to press for spending in excess of caps.
* There is almost no entitlement reform. That is kicked over to a new joint committee, with (surprise!) a new bureaucracy. The committee is empowered to consider cuts up to $1.5 trillion over a decade. It will consist of six Senators and six Republicans, evenly divided by party.
* The deal makes tax hikes more probable. Contrary to some GOP spin, the joint committee will be fully empowered to propose tax hikes, and it likely will do so.
* It likely will do so because (1) Only one Republican vote is needed to join the Democrats on that issue, and (2) President Obama has announced that he will veto any renewal of the Bush tax cuts unless Congress raises taxes. So whatever the committee does, taxes go up.
* Continued heavy debt and tax uncertainty will continue to depress the economy, and therefore government revenues.
* Any tax increases will likely make the deficit worse. This is because of (1) resulting economic drag and (2) historically, tax hikes provoke spending hikes at a rate greater than unity.
Those looking for meaningful constitutional reform from Congress can forget it. True, the deal requires a vote on a balanced budget amendment in each house, with no particular content specified for the BBA.
But it will not get the necessary two-thirds of each house to pass: Other than repeal of Prohibition, Congress has not approved an amendment that limits its own power since it voted for the Bill of Rights in 1789.