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Congress has plenty of deficit-cutting plans, but can any of them fly?

President Obama met with Senate Democrats on Wednesday, and he will meet with Republicans Thursday in a bid to find a fiscal way forward.

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Overall, the key sticking points are quite familiar – spending and taxes. House Speaker John Boehner this week called for a solution with no tax increases and with trillions of dollars in spending cuts – a level at least as high as the president’s proposed hike in the debt ceiling.

Andy Nelson/The Christian Science Monitor

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With the two parties dug in miles apart, Capitol Hill is bubbling with competing plans to bring down the deficit and raise the debt ceiling. And President Obama is taking a stronger hand to close the gap.

Mr. Obama met with Senate Democrats at the White House on Wednesday, and he will meet with Republicans Thursday in a bid to find a way forward. Unlike during the health-care reform process, he is not leaving it to congressional leaders to shape the plan.

“If the president invests some of his political capital into the discussions, it could help bring about a deal,” says Julian Zelizer, a congressional historian at Princeton University in New Jersey. “The danger is that if it falls apart, the more responsibility he takes for the failure.”

Vice President Joe Biden has been leading a negotiating group to chart a new fiscal course. But this week, other lawmakers have presented proposals, too.

Overall, the key sticking points are quite familiar – spending and taxes. House Speaker John Boehner this week called for a solution with no tax increases and with trillions of dollars in spending cuts – a level at least as high as the president’s proposed hike in the debt ceiling.

“We are about accomplishing major spending cuts,” said House majority leader Eric Cantor (R), in a briefing with reporters on Wednesday. “It is trillions, not billions, that we are talking about. And it's pretty obvious why we're saying that. We've got a $1.6 trillion deficit this year alone. Anything less is not serious.”

Democrats say it’s not possible to achieve cuts in the trillion-dollar range without raising taxes. The issue, they say, is by how much. Sen. Kent Conrad (D) of North Dakota, who chairs the Senate Budget Committee, presented the latest draft of his fiscal 2012 budget proposal to the Democratic caucus on Tuesday. The measure, details of which have yet to be released, gets to savings of $4 trillion over 10 years, with tax increases accounting for as much as spending cuts – or even more.

"We're looking at large amounts of money that we have to work toward saving," said Senate majority leader Harry Reid (D), in a briefing with reporters Tuesday. "But it can't all be done by cutting domestic discretionary spending."

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Senate Republicans say they have yet to see the budget proposal and apparently won’t be given time to study it before a markup next week. They also object to the reports that the ratio of spending cuts to tax increases will be 1 to 1, as reported Tuesday by Senator Reid – or even more heavily weighted toward tax hikes.

“I am troubled by reports that the Senate Democrat budget will tax more than it saves – cutting only $1.5 trillion over ten years at a time when this year's deficit alone will reach that high,” said Sen. Jeff Sessions (R) of Alabama, the top Republican on the Senate Budget Committee, in a statement Wednesday.

Senator Conrad is also a member of the so-called Gang of Six, and in that capacity, he’s working with three Republicans and two other Democrats on a bipartisan package to reduce deficits. But time is running out, with Senate Democrats pushing for a markup of the budget next week.

Meanwhile, conservatives are advancing their own counterproposals. Sen. Patrick Toomey (R) of Pennsylvania, backed by most of the Senate’s tea party caucus, released a budget outline on Tuesday that proposes balancing the budget by fiscal year 2020. The plan proposes spending 3 percent less than the budget that the House passed for FY 2012 and 16 percent less than the president’s budget.

It eliminates special-interest tax breaks and lowers income tax brackets, including a reduction in the corporate tax rate from 35 percent to 25 percent. It converts Medicaid to a block-grant program to the states and would roll back spending in that program to pre-stimulus, FY 2008 levels by 2019.

“The bad news is that Congress has chosen to run deficits for 33 of the last 36 years,” Senator Toomey said in a statement. “The good news is that these deficits represent a political, rather than an economic problem, and Congress is quite capable of finding a solution.”

But with the prospect of America defaulting on the national debt getting closer, the focus is shifting from competing plans to what party leaders can negotiate directly with the president and the negotiating group led by Mr. Biden.

“With all due respect to the Gang of Six or any other bipartisan discussions going on on this issue, the discussions that can lead to a result between now and August are the talks being led by Vice President Biden,” said Senate Republican leader Mitch McConnell, after a caucus meeting on Tuesday.


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