John Boehner And Harry Reid Release Competing, Mostly Incompatible, Debt Plans
John Boehner and Harry Reid introduced their debt plans. Now, where do we go from here?
Speaker John Boehner and Senate Majority Leader Harry Reid released the details of their respective plans to reach an agreement on spending cuts that would allow Congress to pass an increase in the debt ceiling by August 2nd. As suspect, the two plans, and any chances of compromise, couldn’t be further apart. In fact, the only thing the two plans seem to have in common is that neither one includes tax increases of any kind, an indication that the GOP has won the fight on that issue it would seem.
• Cuts that exceed the debt hike. The framework would cut and cap discretionary spending immediately, saving $1.2 trillion over 10 years (subject to CBO confirmation), and raise the debt ceiling by less – up to $1 trillion.
• Caps to control future spending. The framework imposes spending caps that would establish clear limits on future spending and serve as a barrier against government expansion while the economy grows. Failure to remain below these caps will trigger automatic across-the-board cuts (otherwise known as sequestration).
• Balanced Budget Amendment. The framework advances the cause of the Balanced Budget Amendment by requiring the House and Senate to vote on the measure after Oct. 1, but before the end of the year, allowing the American people time to build sufficient support for this popular reform.
• Entitlement Reforms & Savings. The framework creates a Joint Committee of Congress that is required to report legislation that would produce a proposal to reduce the deficit by at least $1.8 trillion over 10 years. Each chamber would consider the proposal of the joint committee on an up-or-down basis without any amendments. If the proposal is enacted, then the president would be authorized to request a debt limit increase of $1.6 trillion.
Senator Reid, meanwhile, is circulating a plan that has purportedly larger cuts and only requires one increase in the debt ceiling:
— $1.2 Trillion in Discretionary Spending Cuts. The $1.2 trillion in discretionary spending cuts include both defense and non-defense spending. Before Speaker Boehner broke off talks with the White House on Friday, he had already agreed to $1.2 trillion in discretionary spending cuts.
— $100 Billion in Mandatory Savings. The proposal includes $100 billion in mandatory savings that were negotiated by Democrats and Republicans participating in the negotiations led by Vice President Biden. These savings will not impact Medicare, Medicaid, or Social Security benefits in any way.
— $1 Trillion in Savings From Winding Down the Wars in Iraq and Afghanistan. Winding down the wars in Iraq and Afghanistan will save $1 trillion. Paul Ryan’s budget also included this savings in its deficit reduction calculation, which was supported by 235 House Republicans and 40 Senate Republicans.
— $400 Billion in Interest Savings. The package includes $400 billion in interest savings, $220 billion from the discretionary spending cuts and $180 billion from winding down the wars in Iraq and Afghanistan. Both the Ryan budget and the House Cut, Cap and Balance plan similarly included interest savings in their total calculation.
— Establishes Joint Congressional Committee to Find Future Savings. In addition to $2.7 trillion in concrete savings, the Senate package will establish a joint, bipartisan committee, made up of 12 members, to present options for future deficit reduction. The committee’s recommendations will be guaranteed an up-or-down Senate vote, without amendments, by the end of 2011.
It’s probably not appropriate to call this the “Reid Plan” anymore, since ABC’s Jake Tapper reports that the White House has thrown its weight behind the idea:
Accusing House Republicans of walking away from deficit negotiations “after insisting that the budget be balanced on the backs of seniors and the middle class,” White House press secretary Jay Carney issued a statement embracing the deficit reduction approach of Senate Majority Leader Harry Reid, D-Nev., which he calls “a responsible compromise that cuts spending in a way that protects critical investments and does not harm the economic recovery.”
This part of Carney’s statement is interesting and likely to be the focus of how the White House and Democrats will attempt to spin this over the coming days:
Faced with the ‘my way or the highway,’ short-term approach of the House Republicans, Senator Reid has put forward a responsible compromise that cuts spending in a way that protects critical investments and does not harm the economic recovery. All the cuts put forward in this approach were previously agreed to by both parties through the process led by the Vice President. Senator Reid’s plan also reduces the deficit more than enough to meet the contrived dollar-for-dollar criteria called for by House Republicans, and, most importantly, it removes the cloud of a possible default from our economy through 2012. The plan would make a meaningful down payment in addressing our fiscal challenge, and we could continue to work together to build on it with a balanced approach to deficit reduction that includes additional spending reforms and closing tax loopholes for corporations, millionaires and billionaires
The question, of course, is where we go from here. It’s quite obvious that neither the Boehner Plan nor the Reid/White House Plan will be completely acceptable to the other side. Democrats will object, rightly I think, to the Boehner Plan’s two-tiered approach and the idea of revisiting the battle over raising the debt ceiling again in the middle of a Presidential election year. They also won’t like the idea of the Balanced Budget Amendment element, especially if it’s the version that the House GOP is pushing right now (which is, as I’ve noted, so fatally flawed as to be worthless anyway). Republicans are likely to jump on the Reid Plan’s $1 trillion in “war savings,” which is a form of projected spending “savings” that fiscal conservatives have criticized in the past and, I’m sure, they’ll say that the $1 trillion in discretionary spending cuts is made up of accounting gimmicks.
What we’ve got then are two plans, neither one of which has any chance of being passed by Congress and signed by the President absent significant concessions from both sides. Given how these negotiations have gone so far, I don’t see that happening. Instead, it’s more likely that the House will go through with a vote on its plan, which the Senate will reject, and then we’ll be back in the same position we are right now on Friday except we’ll only have about 72 hours before the August 2nd deadline hits. In other words, if this is what Congress spent its weekend working on then it has been a waste of a weekend, and it looks like we’ll be wasting a legislative week on more partisan posturing.
I’m waiting for Congress to prove me wrong, but I doubt they will.