As advertised, Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner (R-OH) are pushing dueling plans to raise the debt limit on or before August 2, to avoid a catastrophic default. The plans are similar in key ways, but differ on perhaps the last sticking point in the debt limit debate: Whether the debt limit should be raised all the way into 2013, or whether Congress should replay this debt limit fight again early next year, to force Democrats and Republicans to pass entitlement and tax reforms.Reid’s plan, drawn from cuts identified in bipartisan negotiations with the White House, includes $1.2 trillion in discretionary spending reductions — from both defense and non-defense programs — over 10 years. It would save $100 billion in non-entitlement mandatory spending — from fraud reduction, reforms to Fannie Mae and Freddie Mac, from agricultural subsidies, and from higher-ed programs.
As reported here, it also counts $1 trillion in savings from the projected wind-down of the wars in Iraq and Afghanistan — savings Republicans counted in their own budget, but have resisted since on the grounds that the savings are baked into current defense policy and will happen with or without a new fiscal agreement.
These reduced expenditures would result in a $400 billion reduction in projected interest payments on the U.S. debt over a decade. And would create a joint congressional committee to expedite tax and entitlement reform legislation through Congress — but wouldn’t contain any triggered spending cuts or tax increases to automatically take effect if Congress fails to pass further legislation.
Boehner’s plan would initially only increase the debt limit by $1 trillion — bringing us through early next year — but give President Obama the authority to raise it into 2012 if and only if Congress passes and he then signs future tax and entitlement legislation that reduces the deficit by at least $1.8 trillion. It likewise includes $1.2 trillion in discretionary spending cuts, and caps spending in out years, which, if exceeded, would trigger automatic cuts to domestic accounts across the board. It guarantees a vote on a Balanced Budget Amendment by year’s end. Neither plan touches tax revenue.
Republican aides in both the House and Senate suggest Reid’s plan can’t pass the House, and likely can’t pass the Senate either — members will oppose it to squeeze Democrats to pass Boehner’s plan.
But the White House is pressing House Republicans to pass Reid’s plan. And at a press conference with Sen. Chuck Schumer (D-NY), Reid said Boehner’s plan can’t pass the Senate and even if it could Obama would veto it.
“The Republicans’ short-term plan is a non-starter in the Senate and in the White House,” Reid said.
Schumer called Reid’s plan a fair compromise. “At this point there is no alternative other than default, and no basis for Republicans rejecting the proposal other than that they want a default,” Schumer added.
The legislative chess here, though, doesn’t necessarily favor Democrats — particularly if Boehner can whip up 218 votes for his own plan. More on that shortly.