Advancing a Free Society

Understanding the Budget Control Act

Monday, August 1, 2011

This is the second of three posts on the bill agreed to by the President and the bipartisan bicameral leaders of Congress (Speaker Boehner and Leaders Reid, McConnell, and Pelosi).

The other two posts are:

  1. Quick summary of the Budget Control Act; and
  2. Strategic analysis of the Budget Control Act.

If you have not read my quick summary post, please do so before reading this one. I cover three topics in this post:  how taxes are treated in the Joint Committee, how the spending cut trigger works, and the intentional imbalance of triggered spending cuts.  All three are critical to the strategic analysis.

How taxes are treated in the Joint Committee

This bill does not raise taxes.

The $917 B of spending cuts that immediately take effect are just that, spending cuts. No tax increases there.

The Balanced Budget Amendment might or might not have a 2/3 voting requirement to raise taxes. That’s up to the House and Senate to decide when they vote on a BBA.

It gets complex when you look at the new Joint Committee.

Continue reading Keith Hennessey…