As the debt ceiling debate continues between Congress and President Obama, the August 2nd deadline set by Treasury Secretary Timothy Geithner quickly approaches. Competing proposals from leaders of both legislative chambers emerged late Monday to address the crisis and advert economic fallout in the United States and global financial markets.
House Speaker John Boehner (R-OH) unveiled his debt-ceiling and deficit-reduction plan Monday afternoon. The plan, modeled after the "Cap, Cut and Trade" legislation recently passed by the House of Representatives, takes a two-step approach.
First, it would raise the current $14.3 trillion debt ceiling by $900 billion to $1 trillion and slash $1.2 trillion in spending over the next 10 years by imposing strict discretionary spending caps. Another increase of $1.6 trillion would hinge on indentifying and then achieving $1.8 trillion in savings. These cuts would come largely from government benefit programs and entitlements, such as Medicare and Medicaid. Second, a new 12-member congressional panel suggested in Boehner's proposal would recommend another round of cuts. The proposal also includes statutory language that would require a balanced federal budget.
Boehner's proposal does not include any of the increased revenues the Obama administration had been pursuing before debt talks broke off. The squabble over increased revenue caused the negotiations between Boehner and the president to break down. Reports indicate that during a closed door meeting, Boehner conceded to his conference that his plan is "not perfect," nor is it the Cut, Cap and Balance Act the House GOP passed last week. However, Boehner was confident his plan could clear both chambers of Congress and end up on the president's desk for action.
Meanwhile, Senate Majority Leader Harry Reid (D-NV) also unveiled his budget proposal late Monday, about an hour or so after the Speaker. His approach features a one-step response to the crisis, slashing $2.7 trillion in federal spending over the next 10 years, without relying on revenue increases or cuts to government benefit and entitlement programs.
The plan was presented to President Obama Sunday night at the White House. Obama said he supports the Reid option because it increases the national debt limit, even though it does not include the revenue increases the president sought in negotiations with congressional leaders. The president has adamantly stated that he will veto any short-term debt extension similar to the proposal offered by Boehner.
Still, Reid's plan calls for $1 trillion in budget savings from drawing down the conflicts in Iraq and Afghanistan. Republicans, and even a Democratic caucus member, were quick to declare the provision a budgetary gimmick given that the Pentagon already intends to cut spending on military operations.
"I don't think it's a real cut," Senator Joe Lieberman (I-CT) said, yet he would not rule out supporting the majority leader's plan. "It's like a bookkeeping cut. It goes to an artificially high number to just what we assume will be a reduction in overseas contingencies fund because we are drawing our troops out of Iraq and Afghanistan."
Reid's budget roadmap faces a tough road in the Senate, even with a White House endorsement. Democrats rallied behind the proposal, but Republicans are unified in opposition. Thus, the majority leader will have difficulty garnering the 60 votes needed to invoke cloture and set the bill on the path to an up-or-down vote.
President Obama Re-Enters the Fray
After the breakdown of negotiations between the White House and Congressional leaders on Friday night, it seemed as though any compromise on the debt ceiling was going to be negotiated by Reid and Boehner. However, President took the case directly to the American people in a primetime, nationally televised address earlier this week. With neither the administration nor House Republicans willing to budge, the president implored Americans to call or email their representatives and voice their concerns.
"This is no way to run the greatest country on Earth. We can't allow the American people to become collateral damage to Washington's political warfare," Obama said. "If you want a balanced approach to reducing the deficit, let your member of Congress know. Defaulting on our obligations is a reckless and irresponsible outcome to this debate. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn't solve the problem."
Moments after the president concluded his address, Boehner offered the Republican position.
"I want you to know I made a sincere effort to work with the president to identify a path forward that would implement the principles of Cut, Cap and Balance in a manner that could secure bipartisan support and be signed into law. I gave it my all. Unfortunately, the president would not take yes for an answer. Even when we thought we might be close to an agreement, the president's demands changed," Boehner said.