Congress and the White House have reached a deal that would bust sequestration’s spending caps by $80 billion over the next two years, while also raising the debt ceiling through March 2017.
The automatic spending cuts and caps of sequestration were supposed to be a way of forcing a grand bargain over the budget.
“The idea was never that sequestration would take place,” said John Gilmour, a professor of government at the College of William and Mary. “It was always thought that cutting spending in this mindless way would be so awful that Congress would never let it happen.”
But it did happen. Members of Congress also tried sequestration for a while in the 1980s. Then, after some legal challenges, they said, never mind —and killed it.
That didn’t happen this time around. Instead, Congress and the White House just found ways around sequestration’s budget caps. They have offset the extra spending, but with temporary fixes like selling oil from the Strategic Petroleum Reserve.
“These are temporary solutions to long-term problems,” said Henrietta Treyz, a macroeconomic policy analyst at Height Securities. “If you want to actually fundamentally alter the trajectory of our deficit, you need to go after taxes and entitlements.”
In some kind of a grand budget bargain, which is definitely not what Congress and the White House have announced. Still, Harvard public finance professor Linda Bilmes maintains, it’s better than nothing.
“They definitely accomplished something here,” she said. “On the other hand, we shouldn’t say that this is the answer to all of our problems.”
Bilmes is hoping this latest deal will pave the way for some fundamental budget reform.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.