Hey @mattgaetz, the debt ceiling deal "cuts" spending by 0.2% of GDP or about $50 billion.
Is that good enough?
— zerohedge (@zerohedge) May 28, 2023
That's right: that 0.2% cut in spending is what all the brewhaha was over, a cut which will not only push total debt to $35 trillion by the end of Biden's term, but will not even put a dent in the long-term US debt trajectory which even the CBO has no problem as showing in its full, hyperinflationary glory.
Still, to Kevin McCarthy who "negotiated" on behalf of America's conservatives, that paltry, laughable nominal "spending reduction" was apparently something to be very proud of, as he repeatedly pointed out on his twitter feed...
It is simple:
- President Biden wanted to spend more and raise taxes.
- Republicans fought—and won—to reduce spending and stop Biden from radical overreach.
The systemic reforms we set in place mark the beginning of historic change in Washington. https://t.co/rjMNsSf5oX
— Kevin McCarthy (@SpeakerMcCarthy) May 29, 2023
... if only a closer look reveals that not all is as it seems.
In its post-mortem of the debt ceiling deal published this evening, Goldman summarizes the outcome as follows: "the spending deal looks likely to reduce spending by 0.1-0.2% of GDP yoy in 2024 and 2025, compared with a baseline in which funding grows with inflation. That said, the boost to funding Congress approved late last year for FY23 was so large (nearly 10% yoy) that overall discretionary spending is likely to be slightly higher in real terms next year despite the new caps."