The dust is now starting to settle after the dramatic and often frustrating debt ceiling saga. Yesterday, the Senate passed and the President signed into law an agreement to raise the debt ceiling and cut spending. (Take a closer look at the deal in our fact sheet.) So while everybody takes a breather (and lawmakers take a vacation), we take a look ahead at what is coming next.

While the debt ceiling deal does include spending cuts, they’re merely a starting point for Washington to begin addressing its spending addiction. We got to this point as a result of decades of overspending, and unless lawmakers return spending to sustainable levels, we’ll be forced to have the same debate over and over again.

The debt ceiling agreement fails to address entitlement spending, the main driver of our national debt, placing the difficult decisions on the commission created by the agreement – a commission which is already attracting skepticism before even being formed. USA Today explains, “Medicare and Medicaid spending rose 10% in the second quarter from a year earlier to a combined annual rate of almost $992 billion, according to new data from the Bureau of Economic Analysis (BEA). The two programs are on track to rise $90 billion in 2011 and crack the $1 trillion milestone for the first time.” In a recent editorial, The Washington Post accurately examined, “The political crisis may be averted for the moment. The fiscal crisis continues.”

All the while, our macro fiscal problems simply serve as an alarming backdrop to Washington’s smaller scale budgeting and spending ineptitude. Congress has failed yet again to pass a budget into law and is far behind the regular appropriations schedule. With the end of fiscal year 2011 less than two months away, the House has only passed six of the 12 spending bills for the next fiscal year.  The Senate has passed just one.

Frankly, it’s a more than a little disconcerting to see lawmakers pat each other on the back and back their bags for vacation when there is so much more to be done. The debt ceiling debate left Americans more and more disenchanted with Washington’s ways as it drove the nation to the brink of default. And the agreement eventually reached did little to allay the concerns of people all across the country struggling to make ends meet. Hopefully lawmakers will use their time off for careful consideration of the gravity of our economic problems and the bold reforms necessary to address them.

For more insight on where we go from here, please see Gretchen Hamel’s memo on the spending debate post-debt ceiling.

BA