Debate on Debt Ceiling Heats UpJuly 20, 2011
The bipartisan “gang of six” has offered a fiscal framework that attempts to deal with the debt ceiling and implement mechanisms to address the growing deficit in coming years. Although this framework—which includes revenue raisers in the form of closing certain tax loopholes and spending cuts—was praised by President Barack Obama and various Republican and Democratic lawmakers, Senate leaders expressed skepticism that there would be enough time to debate and vote on the proposal by the Aug. 2 deadline.
The gang of six, comprised of Sens. Majority Whip Dick Durbin (D-Ill.) Tom Coburn (R-Okla.), Kay Bailey Hutchison (R-Texas), Mark Warner (D-Va.), Saxby Chambliss (R-Ga.) and Kent Conrad (D-N.D.), is proposing $3.7 trillion in deficit reduction that includes $1 trillion in revenue through ending certain tax loopholes, significant changes and spending cuts to Medicaid and Medicare, and changes to Social Security. Interestingly, the gang of six plan also would permanently fix the AMT—something that will enable the Congressional Budget Office to score the tax provision of the bill as a tax cut, not a revenue raiser.
Specifically, the proposal would: make an upfront down payment on reducing the deficit by $500 billion; require nine Senate committees to produce legislation implementing the rest of the deal within six months; create strict new spending caps that would require a 67-vote supermajority in the Senate in order to shrink annual deficits to less than 2 percent of the gross domestic product from about 10 percent this year; reform Social Security to ensure its solvency for 75 years and set up mechanisms to build up savings in the program. The plan also includes several enforcement mechanisms that would force spending cuts if committees fail to produce legislation.
Both Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell(R-Ky.) have reiterated the need to focus on the McConnell-Reid back-up plan, also referred to as Plan B, which is a near-term plan that would provide a $1.5 trillion cut and would lift the debt ceiling with a series of symbolic votes that would allow Obama to raise the debt ceiling unilaterally. Both, along with House Speaker John Boehner (R-Ohio) have stated there simply would not be enough time to fold-in the gang of six proposal with the immediate challenge facing lawmakers: raising the debt ceiling.
Meanwhile, the U.S. House of Representatives yesterday approved the Cut, Cap and Balance Act along party lines. The legislation—praised by conservatives—is unlikely to pass in the Senate when they take it up later this week. Even if the Senate did pass it, President Obama has said he would veto the bill.
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