Debt Ceiling Plan Buffet, Pick Your Poison

Debt Ceiling Plan Buffet, Pick Your Poison

Reid and Boehner square off in an attempt to find a pallatable solution to debt ceiling and budget negotiations.

    

Well, Obama and Biden got together and they came up with a plan to cut spending by $4 trillion. Republicans didn't like it for two reasons; it raised tax revenue and it was written by Obama. So the "grand deal", as the President referred to it, was scrapped. Then Boehner and Obama crafted a plan, and by most accounts it was a good plan. However, the Republican Kindergarten class in the House voted it down; again, it had raised tax revenues. The Ryan Budget released in May, named for House Budget Committee Chair Paul Ryan, includes major cuts in entitlements, while maintaining Bush-era tax cuts and even expanding them a little. That makes it a no-go for House Democrats. Now House Speaker John Boehner's plan goes up against Senate Majority Leader Harry Reid's plan, and Boehner's is found wanting...but it's not that simple. (When is it?)

     This back-and-forth about federal budgets, debt ceilings, and a possible national default has become numbingly convoluted. Speaker Boehner, unable to bring the Republican Party to any kind of consensual diplomatic agreement with Democrats, has attempted to craft an pathetically watered-down (we're talking Mexican beer, here) budget plan, named the "House Plan", that attempts to temporarily raise the debt ceiling and simultaneously cut about $850 billion in spending over ten years. The problem is that the Congressional Budget Office (CBO) gave the plan a very poor ranking, saying its numbers were off and would actually save less. This stalled a House vote Tuesday night that was going to attempt to pass this bipartisan budgetary band-aid.

     Harry Reid, on the other hand, crafted a budget plan, dubbed the "Senate Plan", that would save $2.2 trillion over ten years; three times what Boehner's plan proposed. As Boehner retreats with his budgeteers to recraft the plan for a better CBO rating, Reid seems to have pulled a coup for the Democratic Party, once again portraying the Republican Party as an obstacle to fruitful budget policy.

     However, that's no the whole story. The Senate Plan makes use of a numbers trick, a gimmick that magically inflates the plan's proposed savings by over a trillion dollars; the proposed ending of the conflict in Afghanistan. The Reid plan uses revenue now tied up in the war, as well as interest paid on that revenue, as savings within the next ten years according to his budget plan. Boehner's budget did not use that gimmick, although according to the CBO it is fair game. Reid's plan cuts military spending in 2012 to $125 billion, and caps future military spending at $450 billion. Factor in savings on interest from those funds and the CBO says Reid's savings just from factoring in an end to the Afghanistan war is $1.25 trillion over ten years. Take $1.25 trillion away from $2.2 trillion and you're left with: $950 billion, only marginally better than Boehner's budget plan.

     In addition, Republicans complain, the Ryan budget made no use of money saved in ending the war in Afghanistan; but according to POLITICO, that may not be entirely true. Ryan's plan, which made heavy use of spending cuts to entitlements, as well as expanded tax cuts to the wealthy, proposed $4.1 trillion in savings over ten years; even more than Obama's grand deal plan in early July. However, take away his numbers that are implicitly the result of monies saved by ending the war in Afghanistan and it's whittled down to a modest $600 billion in savings over ten years. The reason? His expanded Bush-era tax cuts make up for almost any revenue gained from cuts to entitlements.

     In lieu of a real budget plan that will include both spending cuts and increased tax revenues over the next ten years, Republican leadership in D.C. seems to prefer half-measures and band-aids. This smacks of the kind of political stalling that comes about before an election, where a party will attempt to pass some temporary stop-gap in anticipation of a new majority after the next election cycle. The problem is that this country is in the middle of possible double-dip recession now, is threatened by a U.S. default and credit downgrade now, and is watching employment edge up even as corporations report windfall profits now. For GOP lawmakers to shirk their responsibilities until November of 2012 is absolutely irresponsible. Those individuals in Washington that are willing to be moderate, to come to the table, and to do their jobs; those Republicans need to over-ride the new Kindergarten Tea Party members (field trip to Washington!) that are refusing to budge on principle and rehash the same impractical policy ideas over and over. Marginalize and vocal minority, come to the table with Democrats, and pass a real budget so we can stop wasting time on this and move on to something really important, like how we can get 1 in every 10 Americans back to work!