Two new plans. Same old stalemate. Despite hopes for a deal over the weekend, the debt ceiling debate pushed onward in Congress on Monday with two very different proposals aimed at reining in America's spending. The plans, one each from the leaders of the House and Senate, would raise the debt ceiling while making trillions in spending cuts with no revenue increases. But as members of both chambers recycle past talking points, the political debate over the nation's debt still centers on where to cut and when. [Read more about the deficit and national debt.]
Just a week and a day away from the August 2 deadline, Senate Majority Leader Harry Reid and House Speaker John Boehner came out with rival plans for raising the nation's debt ceiling. The problem, however, is that neither seem to bridge the gap between the two sides.
Reid’s plan would cut the deficit by $2.7 trillion over 10 years, while keeping safe the Democrats’ prized entitlement programs—Medicare, Medicaid, and Social Security. It would also put off another debt ceiling vote until after the 2012 elections. The plan, unlike other Democratic proposals floated in the past, also does not include revenue increases. President Obama in a speech Monday to the National Council de La Raza, an Hispanic civil rights advocacy group, suggested that he still favors a “balanced approach” in which “the wealthiest Americans and big corporations pay their fair share.” Nevertheless, later in the day, in a statement from press secretary Jay Carney, the White House endorsed Reid’s proposal as a “reasonable” compromise that does not preclude tax hikes down the road.
Reid argued that his approach meets the GOP's stated criteria for raising the debt limit, namely that the spending cuts are equal to the increase in debt limit and that there are no tax hikes. "Democrats have done more than just meet Republicans in the middle. We've met them all the way," said Reid on the Senate floor Monday. "Now we'll see if Republicans are against any agreement at all, or if they remember how to say yes when the compromise on the table gives them everything they've been after."
But, as far as Republicans are concerned, the Democrats' proposal doesn't quite meet them where they want, since it doesn't adequately tackle the government's knack for high spending. "I believe that the plan is full of gimmicks. We're not making any real changes in the spending structure of our government, and it doesn't deal with the biggest drivers of our deficit and our debt, and that would be entitlement programs," said Boehner in a press conference Monday afternoon. [See a collection of political cartoons on the economy.]
On the other hand, Boehner's own plan, which is similar to House Republicans' "Cut, Cap, and Balance," which passed the House last week before stalling in the Senate, would make cuts in a two-stage process, making up to $1 trillion in discretionary cuts immediately and forcing a separate vote on cuts to mandatory entitlement spending before November 2012. It also includes caps on future discretionary spending and requires a vote later this year on a balanced budget amendment to the constitution.
Apart from spending then, the fight depends on whether the debt limit issue will come up again before election. Senate Minority Leader Mitch McConnell, who said that as of Saturday afternoon he had "no doubt that a deal was at hand," claims the recent impasse comes down to the president's re-election efforts. "It's hard to believe this has anything to do with anything other than the president's re-election," said McConnell on the Senate floor Monday. [See who will suffer if there's no debt-ceiling deal.]
That said, Democrats warn that a short-term deal, like the one Boehner's advocating, sends more uncertainty to global markets and could increase the likelihood of a downgrade to U.S. credit ratings.
President Obama will speak on the issue Monday night. Whether either proposal leads to a deal will be decided by separate votes in Congress later this week.