The bill that will raise the debt ceiling has passed the House and is headed for the Senate. It effectively ends weeks of handwringing over whether or not the U.S. was going to default on its debt. When it comes to the political implications, former Vermont Governor Howard Dean says President Biden and House Speaker Kevin McCarthy "cut the legs from out under the right wing," adding the deal was "a big win" for both leaders. Maya MacGuineas, President of the Committee for a Responsible Federal Budget agrees, saying the leadership exhibited on both sides was "masterful."
Let's bring in former governor of Vermont, Howard Dean, and Maya MacGuineas, President of the Committee for a Responsible Federal Budget. A big welcome to you both. So first, I want to start with you, Howard, because a lot of people were saying, look, if neither side is happy, that's the sign of a good deal. But what are your thoughts on this deal, at least, that has gone so far through the house?
Second there was a bipartisan bill that did something hard instead of easy. And the art of compromise came back through this bill. And I think I agree with the governor that the leadership that was exhibited on both sides here was really quite masterful, in that they compromised but still stayed true to some of the more important values that each side held.
That's how politics is supposed to work. And so we are nowhere close to done on what needs to get done. But if this is the first step in moving towards more bipartisan efforts on fiscal policy, that would be a tremendous achievement.
- And Governor, we know that Speaker McCarthy had spoken about this being a real test for him, even as he was vying for that Speaker position, knowing that that debt limit was going to be hanging over his head. Do you think this is a sign then of perhaps more bipartisanship, or was this sort of one of those deals that just had to be done to just avoid default, and not necessarily a sign of things to come?
HOWARD DEAN: I think it's-- of course, I'm always an optimist. But I think it's a real sign of hopefulness, and I give Hakeem Jeffries a lot of credit as well. I'm sure Biden leaned on the House. I mean, I would have had a hard time voting for this had I'd been a House member, but it was the right thing to do. And there was plenty of things, as a Democrat, that I didn't like in the bill.
But I think Maya is absolutely right. It does reduce the deficit, unlike a lot of the stuff that Trump did when he cut the hell out of taxes. I mean, he's really the one that's responsible for the fiscal situation right now because they keep cutting taxes and they're not cutting spending.
Because they can't cut spending because the American people would have a fit. So I really-- I think this is a big win for the moderates in this country, and we haven't seen a win like that for a while.
- Indeed. And Maya, when you look at some of the estimations here from the Congressional Budget Office, estimating the deal would cut federal spending by over $1.5 trillion over a decade. Now we know that we've avoided default, what are some of the other budgetary issues that did get sort of-- as the can was kicked down the road, that people should be aware of?
MAYA MACGUINEAS: Yeah, so the main issues are that in this deal, which will save a trillion or possibly more, which would be really, again, a good step it, doesn't get us where we need, but it's such an important shift in direction. But this only put a very small portion of the budget on the table. It was only looking at savings in domestic discretionary, that is a fraction of the budget.
What we need to do next is we need to-- and I think this should be done through a Commission because it's so difficult, and the political process is so partisan and polarized right now. We need to put everything on the table. We need to acknowledge the fact that both Social Security and Medicare are headed towards insolvency in a decade. And if we don't make changes, people who depend on them will be harmed.
We need to acknowledge that we're going to have to raise taxes and figure out the best way to raise further revenues. We need to look at the defense budget, which wasn't part of this. Everything needs to be on the table.
And I would also say, the other thing we need to include in a Commission, which I hope they will appoint, a bipartisan, bicameral Commission, I think we need to reform the debt ceiling. Not get rid of it completely because it is the only thing that forces us to assess the fiscal situation and make needed improvements from time-to-time, but we need to replace it with something that doesn't have the threat of default.
We need to have triggers and things that create action-forcing moments, but not ones that would be absolute chaos. Because having seen how close people were willing to get to default, we can't go through this again.
- And Governor, is there an appetite for these sorts of reforms in some of your colleagues that you're speaking to in the DNC?
HOWARD DEAN: Absolutely-- well, I'm not in the DNC anymore, but no, there's no appetite for this at all. This is hard. And politicians don't like to do things that are hard.
I agree very much with Maya on the Commission, even though it won't have any teeth and they'll ignore it, but it will give people some cover to do the things that have to be done. She's absolutely right about Social Security. And the problem is, if we wait too long, it'll be really, really a difficult situation to fix. I have to say, I'd probably be at the barricades in France, but Macron did exactly the right thing, and his people will thank him for it long after he's out of office.
And that's the problem with politics in this country now, which has just taken a big step in the right direction with this bill and this process. But for a long time, people were so uncooperative and unhelpful that they let the country go to hell. And we can't afford to do that anymore.
And the path back is moderation and reason and compromise, and doing things you really don't want to do in return for having the other side do some things you really don't want to do. And that's why I'm a big fan of this deal, even though I certainly don't like all of it either.
- So then Maya, for people-- we know how investors are reacting because at least we can see that in the markets. But for everyday people, who are sort of seeing these headlines about some of these cuts some of these caps and this deal going through, how should they expect, perhaps, their finances to be affected in the coming months?
MAYA MACGUINEAS: Well, overall--
[INTERPOSING VOICES]
HOWARD DEAN: Sorry, go ahead.
MAYA MACGUINEAS: Sorry. This is certainly a plus for the overall country, in that it's going to help start to shift the direction we're moving in to start stabilizing the debt. It would take about 8 trillion in savings to stabilize the debt, this is going to be 1, possibly 2 trillion, so there's obviously a lot more to do.
But the closer we get to that, the stronger it makes our economy, both in the medium and long term in terms of interest rates won't go up as high, there'll be less pressure on inflation. But it also makes us stronger from a geopolitical perspective and our national security.
And so while I think what you'll see is attacks on both sides saying, you didn't get enough spending cuts or you got these terrible spending cuts, and both sides will try to portray it badly, as we see in politics. The truth is there isn't a tremendous amount of sacrifice in this package. There's nothing close to what it would actually take to address the debt, it's baby steps. But there is a very positive macro effect both in the economy and our role in the world.
Remember, countries were looking at the US, rolling their eyes, saying, what are you doing? You can't get along and you're talking about defaulting? This deal is the kind of thing that actually can reassure the countries that look to the US that we are, in the end, able to do the right thing, and the leadership that was exhibited here is reassuring.
- And Governor, same question to you. Because, obviously, people are looking at the unemployment rate, they're looking at, perhaps, the US standing in international markets with this-- coming up right up against it with all this brinkmanship here. How do you think this plays out for the economy?
HOWARD DEAN: I think it's not enough, as Maya said. I think we're going to have to do more. And we're going to have to do things that liberals do want to do and things that they don't want to do. And we're going to have to do things a lot of things that the right wingers don't want.
But there are reasonable conservatives, and a whole bunch of them on the Republican side just voted for this. There are also, unfortunately, a whole lot of incredibly unreasonable people, a lot of whom are running for President on the Republican side.
But if we could just bring back the Civil discussion between conservatives and liberals about what's essential and how do we run a fiscally responsible country, I think we could get somewhere. And I have to say, again, I'll close this out-- repeat myself, McCarthy has really surprised me with this, and to the good.
And I think Biden, who I have not been particularly close to-- there are many other presidents I've been closer to than Joe Biden-- I think he has done a masterful job. He may lack charisma, but he has done something that not many presidents have been able to do in the last 15 years.
- Bipartisanship at its finest, at least, especially on something as considerably important as this to the economy. A big thank you to you both. Former governor of Vermont. Howard Dean, and Maya MacGuineas, President of the Committee for a Responsible Federal Budget. Thank you for weighing in. Thank you for your time this morning.
MAYA MACGUINEAS: Thank you.
HOWARD DEAN: Thank you.