Divergent proposals to raise the debt ceiling are making their way through the legislative process. The U.S. House passed the “Cut, Cap and Balance Act," mostly along party lines, and the Senate plans to take up the measure tomorrow. It would raise the debt limit by $2.4 trillion, but is accompanied by mandatory spending cuts and a balanced budget amendment to the U.S. Constitution.
Meanwhile, President Obama’s prospects for a “grand bargain” might have improved. A bipartisan group of Senators known as the “Gang of Six” released an outline Tuesday to cut $3.7 trillion from the deficit. Most of the savings would come from spending cuts while the remaining quarter would come from revenue. President Obama called the plan “good news” and a “very significant step” to reduce the deficit and lift the debt ceiling.
President Obama spoke with Congressional leaders yesterday and today. Spokesperson Jay Carney said the discussions were "useful and productive." President Obama met separately with Democratic and Republican leaders from the House and Senate at the White House this afternoon.
Numerous media reports say rank-and-file Senators are enthusiastic about the proposal, but Congressional leadership offered a more measured tone. Republican Leader Mitch McConnell (R-KY) said “I don’t have an opinion yet,” while Senate Majority Leader Harry Reid (D-NV) said it is too early to judge it, and he was upfront about the challenges of passing it through two legislative bodies before August 2nd, which is 12 days away.
Members and groups on the left and the right have already expressed opposition. Senator Bernie Sanders (I-VT) wrote in a statement, “This is an approach that should be rejected by the American people. At a time when the rich are becoming richer and corporate profits are soaring, at least half of any deficit-reduction package must come from upper income people and profitable corporations.”
Grover Norquist’s organization Americans for Tax Reform launched a campaign to urge Republican Senators to leave the “Gang of Six.”
Regardless of whether the Senate passes the House Republican's “Cut, Cap and Balance Act,” its chances of becoming law are slim; President Obama said he would veto it, and it is unlikely the House and the Senate can muster the two-thirds necessary to override a Presidential veto.
And because of uncertainty over the fate of the “Gang of Six” plan, a proposal - still a work in progress - by Senate Leaders McConnell and Reid is still being devised. The plan, which is considered by some to be a back-up, would allow the President to raise the debt ceiling with only one-third of Congress supporting it. The plan would enable the President to lift the debt ceiling by up to $900 billion three times through 2012, but he must propose spending cuts of the same amount. Those cuts do not need to be enacted.
The Washington Journal spoke with members of the House about the debt and the House vote on the debt limit and a balanced budget amendment. Rep. Bob Goodlatte (R-VA) and Rep. Peter Welch (D-VT) appeared on the program.
On Friday, Senator Tom Coburn (R-OK) will join the Washington Journal to discuss his plan Back in Black, which would cut $9 trillion from the deficit in the next decade and his decision to endorse a $3.7 trillion proposal released by the “Gang of Six.”