Once again at the eleventh hour, Republican and Democratic leaders found enough common ground to avert complete gridlock past a tight deadline as they passed a bill that would allow the debt ceiling to continue to climb. The bill promises spending cuts of $2.4 Trillion over ten years, equaling the debt ceiling increase (the debt ceiling will rise in three steps).
Unfortunately the battle will continue as a committee is charged with finding $1.5 Trillion of savings by the end of 2011. The committee will consist of six Republicans and six Democrats. These savings could come from an overhaul of the tax code, restructuring entitlement programs or many other sources. The other ~ $900 Billion is detailed in the bill; however, none of these cuts deal with the entitlement programs that make up over 2/3 of our overall spending today.
While $2.4 Trillion may sound like a lot of savings, in actuality it is only a drop in the bucket when compared to our total projected budget shortfalls. Over the next ten years the Congressional Budget Office projects an additional $13 Trillion will be added to the national debt! $2.4 Trillion represents only 18% of the projected shortfall- and only $900 Billion of the $2.4 Trillion of savings have been decided upon as of now. Our leaders need to tackle the difficult issues of entitlement spending and taxes and do this in a much, much more significant way. One positive note- national and political focus is now squarely on deficits- hopefully this means leaders will feel more and more pressure to make the tough decisions.