THE CURRENT House proposal for lifting the debt ceiling is irresponsible. The Senate version is gimmicky. Between the two, we’d opt for gimmicks at this point. It is imperative, as President Obama said Monday night, to call a halt to this “dangerous game.” But even if one of these plans manages to limp past the finish line and avoid fiscal meltdown, no one — least of all those involved in negotiating an end to the debt-ceiling impasse — should feel proud of the outcome.
First, the irresponsible approach. Any serious effort to get the debt under control will require a blend of spending cuts, including entitlement spending, and increased revenue. The package unveiled Monday by House Speaker John A. Boehner (R-Ohio) represents the antithesis of that balanced approach. Mr. Boehner’s two-step solution would cut now (some $1.2 trillion over the next decade in discretionary spending) and cut more later (through a super-committee of Congress that would propose another $1.8 trillion in “entitlement reforms and savings”).
In return, the debt ceiling would be lifted by $1 trillion immediately and another $1.6 trillion if — and only if — the second set of cuts is agreed to, for a total of $2.6 trillion. What is missing from this picture? That’s right — new tax revenue. The plan does not explicitly rule out raising revenue as part of the new committee’s mandate, but Mr. Boehner boasted that “there are no tax increases that are part of this plan.”
This lopsided approach is unacceptable. So, too, as the president noted, is the prospect of another brush with fiscal Armageddon six months from now. The political climate for a balanced deal will not be any more hospitable as the election draws nearer. It is unfortunate that the two sides have been unable to use the debt-ceiling moment as the impetus to achieve a broader deal. But given the impasse, the White House is correct to try to postpone another such showdown until after the election.
Second, the gimmick track. Senate Majority Leader Harry M. Reid (D-Nev.) has come up with a rival approach: a supposed $2.7 trillion package that manages simultaneously to avoid touching entitlement spending and to avoid raising taxes. How? Mr. Reid starts with the $1.2 trillion in discretionary spending cuts on which both the White House and congressional Republicans have already agreed. He adds in $100 billion in cuts in mandatory spending, including $40 billion in “program integrity savings” from going after our old friends — waste, fraud and abuse.
Then come the real gimmicks: The money that won’t be spent as a result of winding down the wars in Iraq and Afghanistan is pegged as a $1 trillion savings, and another $400 billion in savings is credited to lower interest payments. Such gimmickry has a long, bipartisan lineage. The problem is that the tricks offend Republicans who insist on a 1-to-1 ratio of spending cuts to increase in the debt ceiling. But there is no reason, other than showy symbolism, to continue demanding that ratio.
The Reid plan would also establish a bipartisan House-Senate committee to report back with more debt-reduction options, presumably entitlement reforms and tax revenue, by the end of the year; the Senate would then have an up-or-down vote. The most notable difference with the House plan is that the Reid approach would not hold the debt ceiling hostage to the ability of the super-committee to come up with these options. It would give the White House the full $2.4 trillion increase in the debt ceiling that it seeks, upfront, and not contingent on future action.
This unhealthy episode is far from over. But the Senate plan represents the most responsible way out.