The deal that was cut on Friday was merely for another stopgap spending measure. The 2012 budget is a whole other bill, and a much bigger battle, yet to come. But even that is still far down the road.
The next battle will be over raising the debt ceiling, and that one will be really intense. To see how high that debt ceiling already is, look at the U.S. Debt Clock.
The NYT has a good scene-setter article today, Next on the Agenda for Washington: Fight Over Debt:
WASHINGTON — The down-to-the-wire partisan struggle over cuts to this year’s federal budget has intensified concern in Washington, on Wall Street and among economists about the more consequential clash coming over increasing the government’s borrowing limit.
Congressional Republicans are vowing that before they will agree to raise the current $14.25 trillion federal debt ceiling — a step that will become necessary in as little as five weeks — President Obama and Senate Democrats will have to agree to far deeper spending cuts for next year and beyond than those contained in the six-month budget deal agreed to late Friday night that cut $38 billion and averted a government shutdown.
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The United States is one of the few nations that limits its debt by law, and votes in Congress to raise the ceiling, something that happens every few years, are perhaps the least popular that lawmakers face.
Financial and government leaders alike have grown accustomed to some political brinkmanship over raising the cap, confident that Congress ultimately would do so, usually with the party holding the White House supplying most votes. (So it was that Mr. Obama, as a Democratic senator in 2006, voted against a Bush administration request to raise the debt limit; it passed with mostly Republican votes.)
What makes this year different, people in both parties say, is the large number of Congressional Republicans, including the many newcomers who gave the party a House majority, who are strenuously opposed to government spending, and egged on by the activist Tea Party movement to use the leverage of the debt-limit vote to make their stand.
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Of the nearly $14.2 trillion in debt, roughly $5 trillion is money the government has borrowed from other accounts, mostly from Social Security revenues, according to federal figures. Several major policies from the past decade when Republicans controlled the White House and Congress — tax cuts, a Medicare prescription-drug benefit and wars in Iraq and Afghanistan — account for more than $3.2 trillion.
The recession cost more than $800 billion in lost revenues from businesses and individuals and in automatic spending for safety-net programs like unemployment compensation. Mr. Obama’s stimulus spending and tax cuts added about $600 billion through the fiscal year that ended Sept. 30.
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Neither the White House nor Congressional leaders are certain how they will get enough votes to raise the limit. The White House and Democrats in Congress will urge passage of a “clean” debt limit increase, without amendments, though they acknowledge that cannot pass in the Republican-controlled House.
While the House is the focus of most concern, passage in the Democratic-controlled Senate will be a challenge as well. Republican conservatives there, reinforced by Tea Party adherents elected last November, vow to filibuster any increase in the debt limit, which would require a 60-vote supermajority to overcome.
The Republican leader, Senator Mitch McConnell of Kentucky, has privately urged the conservatives not to filibuster, without success, say three people familiar with the talks. He argued that if Republicans did not filibuster and just 50 votes were needed for passage, the Republicans could try to force all the votes to come from the 51 Democrats — including 17 who are up for re-election. But if 60 votes are required because of a filibuster, ultimately some Republicans would have to vote for the increase lest the party be blamed for a debt crisis.
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After this week, Congress recesses until early May, returning just two weeks before Treasury hits the debt ceiling. Even stretching the deadline for action to July, there would be little time to reach a debt-reduction accord.
There are so many angles to this one that it would take a Chess Grandmaster to predict even the opening moves.
The Great Debt Ceiling Battle of June 2011 will make for great political theater, but the brinkmanship we can expect from both sides will get hard on the nerves of those who depend on government paychecks. My advice? The world always needs summer school teachers.