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Right Turn
Posted at 08:30 AM ET, 07/20/2011

House passes cut, cap and balance — and a deal is in sight

The Post reports:

The Republican-controlled House defied a presidential veto threat Tuesday night in approving a bill to amend the Constitution to require a balanced federal budget. But Speaker John A. Boehner acknowledged that a backup plan is needed, and a Senate GOP leader said he expects such an alternative to win his chamber’s approval.
The House voted 234 to 190 in favor of the “Cut, Cap and Balance Act,” which the White House has said will be vetoed in the unlikely event it passes the Senate and reaches President Obama’s desk. Faced with those prospects, Boehner told reporters that it would also be responsible to consider a backup plan for raising the federal debt ceiling and thus averting a potentially disastrous default on U.S. obligations.

Well if not the McConnell plan, then some compromise is going to happen. House Republicans aren’t so intransigent as they have been portrayed. And there is no appetite for default.

So what happens now? A senior Senate aide says there will be a vote in the Senate on cut, cap and balance on Saturday. The proposal got five Democratic votes in the House. How many red state Senate Democrats up for re-election will vote for it? A few, I think.

Meanwhile, the president has heaped praise on the Gang of Six plan, which envisions more than $1.2 trillion in tax hikes and more than $880 billion in defense cuts. (So much for Obama making “sure that we’re cutting it in a way that recognizes we’re still in the middle of a war, we’re winding down another war, and we’ve got a whole bunch of veterans that we’ve got to care for as they come home.”) As Rep. Paul Ryan (R-Wis.) points out, the president’s new favorite plan includes just about every bad idea advanced so far in the debt debate:

Heavy Reliance on Revenues. The plan claims to increase revenues by $1.2 trillion relative to a “plausible baseline.” It also claims to provide $1.5 trillion in tax relief relative to the CBO March baseline. The CBO baseline assumes the expiration of tax relief, resulting in a $3.5 trillion revenue increase. As a result, the plan appears to include a $2 trillion revenue increase relative to a current policy baseline. If the $800 billion in tax increases from the new health care law are included, the plan appears to increase revenues by $2.8 trillion, without addressing unsustainable health care spending that is driving our debt problems.
Elusive Spending Restraint. It is unclear how much the plan achieves in spending savings. Based on released documents, it appears to primarily rely on cuts in the defense budget through $886 billion in reductions from the President’s budget for “security programs.”
Lack of Entitlement Reform. The plan does not address the $1.4 trillion in spending expansions in the new health care law. The health care law increases eligibility for the Medicaid program by one-third and creates a brand new health care entitlement. It does not appear to include reforms to the Medicare program. While it appears to pursue Social Security reform, it could end up creating barriers to enactment of these reforms.

Well, at least we know what Obama stands for: huge tax hikes, ephemeral domestic spending cuts, savaging the defense budget, and zero entitlement reform. I imagine that will come up in ads for the Republican presidential nominee next year.

And Senate Democrats? Most aren’t in favor of any plan. They are not flocking to the Gang of Six, haven’t embraced the McConnell approach and have no plan of their own.

But on a positive note, once the cut, cap and balance vote is taken in the Senate, both houses of Congress can assess where we are. Then the real action in crafting a deal begins in earnest.

By  |  08:30 AM ET, 07/20/2011

Categories:  Budget, House GOP

 
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