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A Look At The Proposed Debt Deal

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A Look At The Proposed Debt Deal


A Look At The Proposed Debt Deal

A Look At The Proposed Debt Deal

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

If you are confused about the deal lawmakers are considering, you are not alone. Melissa Block talks to NPR's Ron Elving, who offers analysis on the debt deal moving through Congress.

MELISSA BLOCK, host: And if you're confused about the deal that lawmakers are considering, you're not alone. We've asked NPR's senior Washington editor, Ron Elving, to help us sort out how this legislation would work. Ron, thanks for coming down.

RON ELVING: Good to be with you, Melissa.

BLOCK: And Ron, let's talk first about the first batch of cuts - about $1 trillion over 10 years. They're described as discretionary spending caps. Walk us through a bit what that means, how it works. Who determines what gets cut?

ELVING: Discretionary spending cap sounds pretty innocent, doesn't it? These are top-line target numbers, enormous numbers in the billions, hundreds of billions. And it's a macro determination of where they want the cutting to be done in discretionary spending for defense and non-defense items, split about 50-50.

So who then decides how we cut those hundreds of billions down to just billions and millions? That's going to be done by the usual process of congressional committees with input from the federal agencies like, say, the Pentagon. On all that defense spending they want to cut, they're going to get input from the Pentagon. But ultimately, it will have to be decided in Congress with the appropriations Congress passes.

BLOCK: And would some stipulations of what cannot be cut included in there?

ELVING: Yes, particularly when you get to the round of the forced cuts, the across-the-board cuts. They are holding some programs harmless - not all programs. But they're trying to hold harmless the entitlement programs, such as Social Security, so that people don't worry about getting their checks. But there are lots of other categories of spending.

One of the disappointments for real deficit hawks is that this plan does not really tackle the problem of the entitlements, or reform the way the entitlements are done.

BLOCK: Ron, what would keep the next Congress, or the Congress after that, from coming in and saying: We don't like these spending cuts; we're going to reverse them.

ELVING: Well, one Congress cannot actually fully bind the next Congress, but it can set the table in ways that really limit the options of the next Congress and set things in motion. This current Congress, as we know, is very unfriendly to the health-care bill that was passed in the previous Congress, and they tried to repeal it. They didn't have quite enough votes to do that, but they've done what they could to reverse that whole trend in terms of health-care law.

So one Congress may not be able to totally reverse the previous one. It can try to change policy direction. But each one of these accumulating plans - that is, changing the way we're spending money - is having an accumulative effect.

BLOCK: The legislation, too, Ron, as I understand it, also stipulates when the cuts would kick in. The idea is that a number of them would be back-loaded so that they wouldn't be as much of a shock to a struggling economy right now or in the immediate future.

ELVING: That's right. There are economic reasons not to want to pull a lot of money out of this struggling economy right now. It needs more demand, and it does not need to have a lot more of the stream of demand cut away by the federal government suddenly cutting back on its spending. That has all kinds of cumulative effects - or rather, it has a rolling effect.

And so they want to not cause too much of a shock now, but they want to get credit in the way that the Congressional Budget Office does all this scoring over a 10-year period, for making serious efforts to reduce spending. So they back-load the cuts.

Most of them would have their effect down the road as - say, for example, defense contractors built fewer boats, fewer warships, fewer aircraft and warcraft. And these kinds of cuts would have their effect several years down the road. And that, of course, is objectionable, too, to many people, and it does have an effect on national security in the long run. But that's why they back-load the cuts, so that they can be made over a planned period.

BLOCK: Ron, we've been talking about phase one of these cuts. The next phase has to do with the so-called super committee that will be charged with finding even more cuts - 12 members of Congress, six from each party, equally from the House and the Senate. First off, who picks those committee members, those lucky 12?

ELVING: It's going to be the party leaders in each chamber, not coincidentally the people who put together this deal. But they're going to be constrained in making those choices. For instance, Speaker Boehner is not going to be able to choose three Republicans from the House without choosing someone who represents this freshman class or the Tea Party, more generally; similarly in the Senate; similarly for the Democrats.

So they're watching each other to see how partisan are the nominees they're going to put on this committee. And are we going to get 12 people who want to compromise, or are we going to get 12 people who want to rumble? We'll have to see whom the leaders pick.

BLOCK: And with that super committee, Ron, there's some confusion about whether taxes, revenue increases are on the table. The White House says the committee will consider tax reform. Republicans are saying that the committee won't. What's the reality there?

ELVING: This special gang of 12 that they're creating, this new committee, it's called the Joint Special Committee on Deficit Reduction. So if, to you, deficit reduction means nothing but spending cuts, well, that tells you that they're not going to consider revenues on this committee. If, on the other hand, you think that deficit reduction can mean both spending cuts and revenue increases, well then you're going to want to talk about revenue increases on this committee.

That's going to be one of the main struggles there. It's probably going to be what brings us down to a 7 to 5 vote, at some point.

BLOCK: OK. NPR's senior Washington editor, Ron Elving. Ron, thanks so much.

ELVING: Thank you, Melissa.

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