The Budget Deal---Good or Bad?

Just a few weeks ago the progressives in congress were complaining that a $32 billion dollar budget cut was draconian last night they agreed to a $39 billion dollar cut. In the first major battle of the 112th congress it is clear that the Republican-controlled House of Representatives has earned it's first victory in its effort to stop the federal government from becoming insolvent.

Some people will complain that Boehner caved, a complaint that quite frankly is nonsense.  And if you don't believe me ask progressive columnist Ezra Klein who is practically in mourning:

Boehner, of course, could afford to speak plainly. He’d not just won the negotiation but had proven himself in his first major test as speaker of the House. He managed to get more from the Democrats than anyone had expected, sell his members on voting for a deal that wasn’t what many of them wanted and avert a shutdown. There is good reason to think that Boehner will be a much more formidable opponent for Obama than Gingrich was for Clinton.

So why were Reid and Obama so eager to celebrate Boehner’s compromise with his conservative members? The Democrats believe it’s good to look like a winner, even if you’ve lost. But they’re sacrificing more than they let on. By celebrating spending cuts, they’ve opened the door to further austerity measures at a moment when the recovery remains fragile. Claiming political victory now opens the door to further policy defeats later.

This is only the first of the major budget battles coming up this year, the smallest of them at that.  The real battles coming up are raising the debt ceiling in mid-may and of course the 2012 fiscal budget.

Key elements of the deal that averts a government shutdown per the WSJ

• Sets discretionary spending for the remainder of the 2011 fiscal year, which ends Sept. 30, at $1.049 trillion. That is $39 billion less than was budgeted for 2010 and $79 billion less than President Obama had requested. House Republicans had wanted $22 billion in additional cuts.
• Includes $513 billion for defense – less than Republicans and President Obama wanted but more than the $508 billion provided in 2010.
• Drops Republican-backed provisions that would have ended funding for the new health-care law, Planned Parenthood Federation of America and National Public Radio.

• Drops Republican-backed provisions that would have barred funding for Environmental Protection Agency regulation of greenhouse gases and for the Federal Communications Commission to implement "net neutrality" rules.
• Bans the use of funds for the transfer of prisoners from the Guantanamo Bay detention center in Cuba to the U.S. mainland.
• Calls for the Senate to take up-or-down votes on separate bills to cut off funding for the health-care law and to turn federal aid to family-planning programs into block grants to the states.

• Bans the use of any public funds – federal or local – to pay for abortions in the District of Columbia.
• Re-establishes a school voucher system for the District of Columbia, a longtime cause of House Speaker John Boehner (R., Ohio). The program provides low-income children with vouchers to attend a school of their parents' choice.
• Includes a mandate calling for an annual audit of the Consumer Financial Protection Bureau, which had been created by last year's Dodd-Frank financial overhaul law. Republicans have been widely critical of the law.

Don't overlook the significance of the Senate vote on de-funding Obamacare. It is doubtful that the bill will pass, and there is no way Obama will sign such a bill, but Democratic Senators running for re-election in 2012 in states where the bill is unpopular will have to publicly reaffirm their support of the bill.  These include incumbents who are already on shaky ground; Bill Nelson of Florida, Claire McCaskill of Missouri, John Tester of Montana and Ben Nelson of Nebraska.

It will also force West Virginia's Joe Manchin to back up his statement made during last years special election "I wouldn't have voted for the final version of that thing with the way that it came out." That claim was faced with much derision when made.  Manchin will have to vote to de-fund Obamacare or face accusations of being a liar when he runs for reelection in 2012.

In the end this was a victory for the GOP and Speaker Boehner. No, it wasn't a total wipe out, something impossible when the other side controls the Senate and the White House, but it was a step in the right fiscal direction and it boxed in some key Senators who have to run for reelection in a year and a half.  Now its on to the debt limit battle and the 2012 budget.