The debt-limit deal that emerged from many late-night, backroom discussions produced political winners and losers. Here’s our take on who won and who lost.
The Tea Party: The upstart Tea Party can claim victory for pressuring the House Republican caucus to retain its no-taxes position. It also pushed for a balanced budget constitutional amendment, which made its way into a revised budget proposal by Speaker John Boehner after his initial plan failed to attract enough Republican votes to pass in the House. The final deal contained no new tax revenues and forces Congress to vote up or down on a balanced budget amendment before the end of the year.
Senate Minority Leader Mitch McConnell: Some view McConnell as the most influential senator in the debt ceiling debate by stressing the importance of avoiding a national default and a compromise that could pass both the House and Senate, which are under split political control. Unlike Boehner, McConnell was mostly able to hold together his caucus of Senate Re;publicans, strengthening his position at the final bargaining table.
Americans for Tax Reform: The final deal contains no new revenue increases, in large part because of the pressure of this anti-tax group that lined up no-tax pledges for many Republicans, including the huge freshmen class.
The Economy: The prolonged debate over the debt ceiling, federal deficits and national debt stole attention away from steps to bolster the economy. Some economists even warned about the bad timing tightening fiscal policy as the U.S. economy showed signs of weakening. As Congress left town after approving the debt package, reports indicated consumer spending in July dropped for the first time in two years. That sent the stock market into a tailspin, despite hopes of a rebound when the debt default was averted. No one knows exactly what would have happened if the federal government ran out of money.
Congress: The American people seem disgusted by the partisan bickering in Washington, D.C. and hold virtually everyone involved responsible. As of July 28, a Gallop Poll ranked Congressional leaders Boehner and Senate Majority Leader Harry Reid lower than President Obama.
“Americans are more likely to approve of the way President Obama is handling the negotiations to raise the federal debt ceiling than they are to approve of the handling of the situation by Speaker of the House John Boehner or Senate Majority Leader Harry Reid, although opinions about all three are more negative than positive,” reports Frank Newport of the Gallup Poll.
Speaker John Boehner: Despite efforts to rein in his caucus, Boehner faced a constant struggle throughout the debate. The Speaker suffered defeat on his initial bill after the Congressional Budget Office scored savings at only $840 billion over the next decade – far below what was advertised. He was forced to satisfy members of the conservative Republican Study Committee (RSC) and re-work the measure. Although the final deal did not include elements fiercely sought by the RSC, Boehner’s ability to control factions of his caucus is clearly a question mark.
Medicare: Security and Medicaid are safe, but cuts to the Medicare program will be on the table if Congress is unable to find spending reductions elsewhere. Although the cuts will be capped at 2 percent and limited to the provider side, health care providers are warning that patients may still be impacted. This is the threat over the head of Congressional Democrats.
FAA and Local Airport Construction: Battle-weary Members of Congress left town, many on airplanes, without funding the Federal Aviation Administration. That led to the furlough of thousands of FAA workers (luckily not including air traffic controllers), as well as suspension of numerous local airport construction projects, which idled thousands more workers, compounding the nation's sluggish jobless rate.
Defense Spending: The first round of cuts probably won't cause major ripples in the Pentagon, but if Congress is unable to come up with a big budget deal, defense will take another automatic hit. This is threat over the head of Congressional Republicans.
President Obama: How Obama fared in the debate remains unclear. He managed to avoid having a national default occur on his watch, but liberal Democrats are seething over the debt deal, which they say unfairly hits low and middle-income Americans without denting the wallets of wealthier citizens. They blame Obama for a lack of leadership in the negotiations. However, given the stridency of most GOP presidential candidates on spending cuts and no new taxes, Democratic liberals may see Obama as the lesser of two evils in the 2012 elections.