Can 'Gang of Six' Save the Day on Debt Ceiling?

The Gang of Six senators have shown up to save the day, but it may be too late to act on their plan.

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Like a movie hero, left for dead, who appears at the last second to save the day, the Senate's so-called "Gang of Six" has added an unexpected surprise to the debt ceiling debate with only two weeks to go before the government runs out of money. Newly reunited with reluctant member Sen. Tom Coburn, the conservative Republican from Oklahoma, the bipartisan group of senators presented to their parties the debt reduction plans which they've been working on for the past six months.

The plan, obtained by U.S. News, is dramatic. It would trim the national debt by $3.7 trillion over the next 10 years. Along with $1 trillion in new tax revenue, the proposal would make substantial changes to Social Security and Medicare. It would force cuts into many sacred cows, including military spending. It immediately garnered praise from top officials in both parties, including President Obama and Tennessee Sen. Lamar Alexander, the third-ranking Republican in the Senate. "This comes at a very interesting time, and a very useful time," says Alexander. But, even if it gains enough bipartisan support for passage, is there enough time to act before the Treasury Department's August 2 deadline to prevent a default? Or did the superhero show up a bit too late this time?

[Vote now: Will there be a debt ceiling deal?]

The gang, which includes Democrats Dick Durbin, Mark Warner, and Kent Conrad, along with Republicans Saxby Chambliss, Mike Crapo, and Coburn, is working to try to wrap a substantive proposal around the timeline of the debt ceiling debate. The problem is that many of the ideas behind the plans--tax reform, adjustments to Medicare and Social Security, and government-wide spending cuts--have taken months of hearings and debate to enact in the past. So lawmakers have structured their proposal to include an initial bill which would slice off $500 billion from the deficit and direct Senate committees to come up with further savings over the next six months. That, according to Senate aides, could be the bill that would raise the debt ceiling, while setting Congress on course to make the rest of the savings.

The changes contemplated in the bill, based on the recommendations from last year's presidential fiscal commission, are sure to draw fire from conservative and liberal critics. The plan would immediately implement a lower cost of living adjustment, which would slowly decrease Social Security benefits over time, while also kicking some taxpayers into higher tax brackets. (The bill would include a safeguard for the poorest recipients.) It would overhaul the Medicare Sustainable Growth Rate, restraining future Medicare benefits. It would reduce income tax rates, creating a system with only three tax brackets. It calls for reforming popular tax deductions such as those for charity, buying homes, healthcare, and retirement, although it stops short of eliminating them. If a committee can't come up with legislation to meet the proposal's guidelines, the law would include a poison pill which would make across-the-board cuts to the programs in the agency's jurisdiction. The proposal includes other procedures to make it easier to pass these cuts in the future.