The recent debt ceiling deal is also known as the "Budget Control Act of 2011". However, all the spending cuts that have been suggested in the deal are unspecified at this point of time. Nevertheless, the financial experts have noted that some people have gained from this debt ceiling deal whereas others have lost ground due to this deal.
Here is a list of winners and losers from the debt ceiling deal:
WINNERS:
1. College students receiving Pell Grants: The new law offers Pell Grants to undergraduate students thereby eliminating the federal student loans for the professional as well as graduate students.
2. People receiving Medicare benefits: Joint Select Committee on Debt Reduction wants to find ways to reduce deficit in Federal budget which may lead to reduction in Medicare benefits. However, if the Committee fails, then Medicare is protected as per the wordings of the new law. In such a situation, the percentage that can be cut from Medicare programs will be limited to 2% per fiscal year.
3. Investors: As per the new law, the debt limit will increase until 2013. This will reassure the global financial markets and the millions of Americans who have their investments in U.S. Treasuries.
4. Beneficiaries of social security and other benefit programs: The new law exempts Social Security from automatic cuts if the Joint Select Committee on Debt Reduction fails to reach an agreement. Apart from that, the various benefit programs which are available for the economically distressed families such as Medicaid, Supplemental Nutrition Assistance, unemployment benefits, etc., are also exempt from the any such sudden cuts.
5. Taxpayers: Initially, the Democrats have asked for tax hikes on wealthier Americans and corporations as a part of the deficit-reduction plan. However, the Republican lawmakers shaped a deal that raises no additional government revenue due to higher taxes. Instead, the whole deal is designed in such a way that the deficit reduction will come from spending cuts.
LOSERS:
1. Federal Government employees: As the Government is in the debt reduction mode, government employees will not receive too many hikes or any other perks.
2. Federal contractors: The Federal contractors will also find that their businesses are affected due to the stern policies of the government. They are more likely to lose their business due to this debt ceiling deal.
3. Defense contractors: A big portion of the budget cuts will come from the U.S. defense budget. This will also include reduction in funding for the departments of defense and homeland security. Thus, various defense programs may get canceled thereby bringing a loss for the defense contractors.
4. Recipients of state aid programs that are non-exempt: In order to reduce the debts, it is likely that the state will squeeze their budgets in order to cut such non-exempt state aid programs.