So we already know what the debt-limit debate did for leaders in Washington: nothing pretty. By and large, the American people were turned off by both parties, infuriated that political squabbling might do measurable damage to the nation’s bottom line.
Some politicians, of course, lost more than others. Senate Republican leader Mitch McConnell proved, once again, to be the city’s most savvy dealmaker, while Speaker John Boehner was forced to reveal just how little sway he holds over his caucus. Barack Obama proved, once again, that he is unable to control Washington dysfunction, though he may have given his re-election campaign a new focus beyond jobs.
But enough with the political scorecards. What about everybody else? Herewith is a quick look at the unelected winners and losers of the debt-limit debate.
Lobbyists: Winners Lawyers tend to make money on complexity, and the compromise Obama signed into law on Tuesday is nothing if not complex, with multiple phases, conditional phases, nonspecific spending caps and the unstated siren song of a tax-code revamp. More important, it promises many more legislative fights to come, involving just about every deep-pocketed interest in town: hospitals, doctors, military contractors, Big Business, small businesses, seniors, investors, hedge funds, etc. Tax reform, which Obama has effectively vowed to force in some form by the end of 2012, threatens higher (and offers possibly lower) taxes on every business, investor and wage earner in the U.S. Business on K Street is about to pick up.
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The Unemployed: Losers As the conversation in Washington has shifted from stimulus to deficits, no one has been more vulnerable than the long-term unemployed. The federal extension of emergency unemployment benefits is set to expire at the end of the year. Obama has said he wants another extension, but he has not proposed a way to pay for it. And with Congress still looking for another $1.5 trillion in cuts or tax increases, the President may have a hard time getting another extension.
Graduate Students: Losers As part of the compromise, graduate students will no longer be able to get federally subsidized loans. The Congressional Budget Office estimates that this change will increase costs for students by about $18.1 billion over 10 years.
Undergraduate Students: Winners What is bad for teaching assistants is good for their pupils. By raiding graduate-student subsidies, Obama was able to save full funding for the Pell Grant program for at least the next two years. How much is the perk worth? Congressional scorekeepers put it at more than $21 billion over 10 years.
The Military: Loser The Pentagon is on the chopping block, both on the front and back ends. The initial discretionary cuts will take hundreds of millions from the Pentagon’s budget, but the real danger to its coffers is more than $500 million in cuts that will kick in if Congress deadlocks and is unable to find $1.5 trillion in savings. The irony here is that the military is just about the only U.S. institution left with the confidence of the American people. A recent Gallup poll found that 78% of Americans had confidence in the military, compared with 18% who said the same for Congress.
Hospitals and Doctors: Losers Long feared in the halls of Congress as a ferocious lobby, the health care provider community has finally met its match: its patients. Faced with the steep, rising cost of Medicare entitlements, Democrats have put medical providers on the chopping block, rather than restructure the benefits for older Americans. If Congress cannot reach another deal, doctors and hospitals could see a 2% cut in payments. Even if it reaches a deal, hospitals and doctors are unlikely to escape the budgetary ax.
Political Fundraisers: Winners If nothing else, the past month has shown that the coming deficit battle will be a big one, sure to inspire the passions and furies of tens of millions of Americans, who could see their tax rates and benefits threatened. That is good news for the folks who channel their passions into political contributions, whether to third-party groups or political campaigns. As the stakes grow, the money is sure to follow.
Wall Street: Winner In the past three months, every politician’s favorite punching bag, Wall Street bankers, became the voice of reason, carefully trying to talk politicians off the ledge of default. It’s not clear how long the resulting goodwill will last. But for the first time since 2008, the people who move the nation’s money are known for something more than careless greed.
Entitlement Cheats: Losers In the fine print of the deal, the budget authority for funding health care fraud and abuse enforcement went up by $3 billion over 10 years. Congressional accountants think this change will bring in $3.7 billion in savings for taxpayers.
Of course, these are just the beginning of the winners and losers. In the weeks and months to come, many more will emerge. And come next November, each will have a chance to say their thanks at the polls — or vent their fury.