The telling reaction to the small federal budget deal

by Chris Fitzsimon, NC Policy Watch and NC SPIN panelist, December 12, 2013.

The various reactions to this week’s announcement of a small budget deal in Congress to avoid another shutdown of the federal government illustrate just how far how of whack the current budget and tax debate remains in Washington.

The deal, negotiated by Republican Congressman Paul Ryan and Democratic Senator Patty Murray, does reduce the impact on both military spending and funding for safety net programs of the next round of scheduled sequester cuts, the draconian automatic budget reductions that were part of a budget deal in 2011 to keep the government operating.

Those cuts have already directly affected people’s lives in North Carolina and across the country, slashing funding for a long list of vital programs including meals for seniors, services for the homeless and Head Start programs for children.

Reducing those damaging cuts is important and so is avoiding another disastrous government shutdown, though how telling is it about our current political debate that merely keeping government open is now a noteworthy achievement?

But given the recent domination of the Republican Party by tea party forces who seem to welcome any chance to slash and burn the government they loathe, it is worth noting indeed.

It’s also important to remember a few things about the Ryan-Murray deal. First of all, it is prompting heated opposition from the far-right inside and outside Washington, even though Ryan has long been a darling of that wing of the Republican Party. Any deal is a bad deal to rigid ideologues who believe compromise is always a horrible mistake, not part of the normal give and take in a democracy.

And the deal itself will only reduce the next round of sequester cuts, it won’t eliminate them. People will still be hurt. It pays for the reduction in cuts with proposals that are troubling in their own right—increasing fees and reducing cost of living increases for some military retirees among them.

And maybe most importantly, the deal does not include an extension in emergency unemployment benefits for long-term laid off workers, still scrambling to find a job in an economy that is still sputtering in many places from the lingering effects of the great Recession.

That means 1.3 million workers and their families are likely to lose this lifeline just after Christmas.

The incremental nature of the deal was all but guaranteed when Ryan ruled out any new tax revenue before the negotiations even began, revenue desperately needed for the investments that have been slashed repeatedly in recent years in the misleading name of “austerity.”

That meant even closing massive corporate tax loopholes was off the table. We’re not talking about raising taxes—that’s another discussion—but merely making some corporations pay the federal taxes they should owe, the taxes that many other companies are already paying.

Apple Inc., for example, has avoided paying taxes on $44 billion in profits in the last four years alone by channeling profits through dummy corporations the company created overseas.

Legislation to stop some of the worst abuses would bring in more than $200 billion in the next 10 years and that’s by addressing only one type of the numerous tax loopholes that some corporations exploit.

Polls clearly show that a majority of Americans believes that closing loopholes and increasing federal revenue should be part of any budget agreement that includes painful cuts. But Ryan ruled that out before things even started, lowering the expectations of what could actually be accomplished in the budget agreement.

So ultimately there’s mixed news in all this, no shutdown and less damage to some people’s lives. But people and vital institutions will still suffer. And negotiators missed an important chance to craft a long-term solution to our federal budget woes that could have included revenue from ending some of the absurd tax breaks for the well-connected corporations.

All in all, it feels like time for a sigh of relief, not a cause for any sort of celebration.