Budget deal still leaves largest deficit in history

Senate Majority Leader Harry Reid, President Barack Obama, and House Speaker John Boehner.

/ CBA/AP

If you believe the spin from the White House and the offices of congressional leaders, there were only winners in the struggle to reach a budget agreement last night and avert a government shutdown.

Both House Speaker John Boehner and Senate Majority Leader Harry Reid called the agreement "historic" and President Obama praised "their leadership" while a team of his top aides did the same for him. (Watch Obama's speech)

A shutdown was avoided and some officials may have racked up a few points on the public perception scoreboard, but it all stems from a failure by the 111th Congress to enact the appropriations bills it was supposed to for the 2011 fiscal year that began last October 1st - six months ago.

With Democrats in charge of both chambers last year, the leadership didn't see to it that Congress do its budget job. On the contrary, Democrats Nancy Pelosi and Harry Reid decided their party's members would fare better in the Nov. 2nd elections if Congress didn't pass the appropriations bills which called for the largest federal deficit in history of over $1.6 trillion.

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So does anyone in government deserve applause or acclaim for passing a budget bill more than six months into the fiscal year it covers?

Depending on whose numbers you accept, the budget agreement calls for either $87.5 billion in cuts or $38.5 billion. Either way, it's a drop in the budget bucket.

The federal budget for 2011 calls for spending of $3.819 trillion and a deficit of $1.645 trillion. Both numbers are the largest in U.S. history.

The hard-fought budget cuts contained in the agreement will reduce the amount of federal deficit spending, but not by much. Even using the $87.5 billion figure repeatedly trumpeted last night by Sen. Reid, it amounts to a 5.3 percent reduction in the government's runaway spending blueprint.

"There is not much of a difference between a $1.5 trillion deficit and a $1.6 trillion deficit," says Sen. Rand Paul, R-Ky., who voted against the short-term funding bill last night. He said the deficit is still way too big and "will lead us to a debt crisis that we may not recover from."

It's possible the battle over the 2011 budget will quickly fade from memory in a few weeks when Congress must address the issue of raising the federal debt limit.

Treasury Secretary Tim Geithner warned Congress this week that the U.S. government will hit the $14.3 trillion ceiling on borrowing "no later than May 16." He said unless the limit is raised, the Treasury risks default on its obligations by July 8.

"Default by the United States is unthinkable," said Geithner in his letter to Congress Monday. Unthinkable, though some Treasury officials can think of nothing else. They fear it would - as Geithner wrote - "cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover."

And the congressional battle over raising the national debt could make the budget fight just ended seem like a minor skirmish in comparison.

All concede default by the government would be a calamity and damage America's financial and political standing in the world. But some in Congress insist that any increase in the debt limit be accompanied by provisions to reduce deficit spending much more rapidly than called for in Mr. Obama's budget projections.

And after the debt limit fight, comes the budget and appropriations bills for the 2012 fiscal year. The president's budget calls for $3.7 trillion in spending and another trillion dollar deficit.

Below, CBS News political analyst John Dickerson discusses winners and loses in the budget fight on CBS' "The Early Show":

[gep1955]

I keep reading comments from liberals that Repubs want to give money to corporations. No moron, they vote to let them keep more of what they work for and earn. That is the American ideal. That even you can start a small business in your mother's basement and create a large company to enrich yourself and others. It's also called work. Something that you are not familiar with. Liberals only GIVE money to those who don't work & buy their vote.

[noloyalisti]

Why do Republicans hate America and its workers so? Ever since Reagan they have been willingly giving all their money to the giant corporations and military to rape and pillage America. And right now we see the results of it.

[noloyalisti]

Cut the military in half, we'll STILL spend more than anyone else in the world. Tax the rich, they'll STILL be rich. By a lot.

[ajvw]

Budget deal still leaves largest deficit in history

exactly why the dems didn't pass a budget before the last election. they would have lost it all

[crazyname]

Democrats won, republicans wanted 100 billion, we got 39 billion. That is what Harry wanted. Dems won, the american public lost. Obama wond do anything worthwhile while he is in office because he in re-election mode, and won't do anything usefull until he is in 2 years of 6 years. Smoke and mirrors is all we get. Republicans put up a good fight, but they lost! Compromise shold not be used when talking abut the debt and the possible failing of the US economy. The dems didn't compromise for the previous years of power and look where we are now! We on't need politians runing our government, we need somebody with a business mind. 1 term and out for all, in all parties. Take the graft and corruption out of washington.

[discussthis]

Dems: "We must keep borrowing and spending. If the GOP does not raise the debt cap, it will be their fault that our spending will cause the country to default on its debt obligations."

[jgg000101]

with rising gas and food prices, imminent inflation and a devaluing dollar, the recovery (if you believe there is one) will grind to a halt regardless of whether the debt ceiling is raised or not. However, we will be further in debt if it gets raised, and the gop will be blamed for the failure.

[jgg000101]

hey, naught, since you admit that dems are borrowing and spending, exactly what messes have they cleaned up in the over 2 years since obama has been president? Correct me if I am wrong, but all indicators point to everything - from unemployment to housing to debt to deficit to welfare and foodstamp recipients to the percentage living in poverty to the middle east - as being better before obama took office. Please, tell me ONE thing that is better.

[wfw3536]

This so disappointing to cut only 38 billion when we are looking at 1.5 trillion in debit. For Obama to claim this is a big deal and say he concerned about our national debit is a joke. Maybe he shouldn't have gotton us into another war in another Arab country.

[SJRPa2011]

People!!! Hello!!! If our Congress had done their job to protect this country, we wouldn't be in this spot. The manufacturing sector paid a significant portion of the U.S. taxes and so did the employed American workers. In 1978 GE started massively off shoring, pushing their suppliers to do the same thing. We now have a GE paying no US taxes for 2009 and looks like even worse news in 2010. And guess who Obama has as his liaison to reform corporate taxes? Why its G.E.'s chief executive, Jeffrey R. Immelt, does anyone see that as working out well? Now that's the Democrat's, the Republicans? Oh my! From Reagan until Obama, the only president to run a surplus was Bill Clinton. A surplus to Washington is if they bring in more than they have to pay out. If they owe a trillion dollars and need to pay a million dollars interest for the year and they bring in taxes of 1 million dollars and 1 cent, there's a surplus. Pretty stupid in my opinion and then the president after Clinton decided to cut taxes because of the 'surplus'. Did any of these guys pass a math class?
So here's what I see, we've given away our industry putting our country at risk (financially and militarily) and have no plans to do anything about it. There was a minor effort last December to change the taxing on multi-nationals which was squashed in Congress. We have some of the highest corporate taxes in the world (35%), but multi-nationals on average pay 22% of it and corporate profits in the third quarter of 2010 were 1.69 trillion dollars, the highest in history. All of those people tossed out of work by the outsourcing (and on sourcing) are going to be kicked again by losing Federal help. And the taxpayer pays for the inspection of imports, but don't worry, we're going to be cutting back on manpower. Please raise your hand if you like imported food with pesticides, poisoned sheet rock, counter fit drugs, foreign countries who own us and a total lack of support for real American (they make it here) companies.
Me, I want a lower tax structure for American Manufacturers, the ones who make goods here and 35% for the multinationals, they are not American companies. Oh and the tax cuts for the rich, exactly when is this going to help the country?

[stirringitup]

Democrats seem to be getting a bit sensitive to the truth.

For Instance, CEO pay is at record levels again while regular folks pay is still dropping once adjusted for inflation. Wall Street has our Federal Government by the short hairs still and likely always will base on their ability to cause the problems and yet jump in line first for bail outs.

Despite or because of (take your pick) health care costs are still rising rapidly. Few Democrat candidates champion this legislation during election season for some strange reason.

Democrats have joined Republicans in calls to reform entitlements (SS, MA and MC) while championing reductions in corporate tax rates. I will graciously opt out if the government pays me back what I paid in plus the prevailing interest rate charged to delinquent taxpayers through the same years.

Obama picked GE executive, Jeffrey R. Immelt, to head his Jobs creation program. The same GE that has outsourced jobs with zeal and paid no Federal Income taxes for years.

Indicated the tax cuts for the wealthy were too expensive to continue as justification for ending said tax cuts. But then crafted a bargain that tripled the costs proving his original statement was a lie and cost was not ever a factor.

Obama he would consult with Congress prior to initiating a military action unless the US was in imminent danger. Yet, he failed to do so with regards to the on going Libyan episode.

Appointed (Okay re-appointed) a Federal Reserve Chief that champions rising prices on everything except for wages.

Democrats have remained extremely quiet about ever increasing gap between the rich and everyone else. They also never mention speculators as a source of evil nor do they restate the proposal to force commodity traders to have the ability to take possession of ? of their contracts on hand.

Still have a 600 trillion dollar unregulated derivatives market; their Wall Street reform bill is constantly being taken apart by the very groups that crafted and championed said bill in the first place (FDIC, FRB).

There are more and more examples that I can cite to prove my case. So now let the name calling begin because that is all you have left. A former Dem that thinks both parties are failing this country!

[1pheasant1]

by jgg000101 April 10, 2011 1:16 PM EDT

The Bush Administration also deserves criticism: although some Bush Administration officials "meekly advocated reforms" of the risky practices engaged in by the government-backed mortgage giants (the "Government-Sponsored Enterprises" Fannie Mae & Freddie Mac, which received $10 billion annually in taxpayer subsidies even before their current bailout), Fannie's well-paid lobbyists easily defeated those reform proposals by paying off liberal lawmakers and bullying critics. And the Administration did nothing to end federal obsessions with "affordable housing" and "diversity" that encouraged lenders to make risky loans to borrowers with little savings.

--------

How disengenuous of you, Jiggs, to water down the role of President Bush and the "fiscal conservatives" he represented. Once again, you have wasted space by calling the Republican actions a fault of the liberals. You fool nobody with your spin.

[Nmmnng]

It wasn't him who said it. It was Hans Bader.

[jgg000101]

I didn't write that. That was part of the article. And I don't see where anything is "watered down" as you claim. If anything it makes bush culpable as well. But the article definitely places the root fault at the feet of clinton and the liberals.