Rumors fly in Washington as the debt ceiling clock winds down.
The debt ceiling debate is ramping up in both intensity and rumor-mongering. Yesterday, with less than two weeks remaining before the August 2nd deadline, The New York Times reported that President Obama and House Speaker John Boehner "were starting to close in on a major budget deal" which would include a combination of spending cuts and revenue increases engendered by an overhaul in the tax code. Shortly afterward, Fox News reported that both Boehner and the White House "emphatically denied" the Times story. White House Press Secretary Jay Carney concurred with Fox. "There is no deal. We are not close to a deal," he told reporters. Yet efforts on various fronts are apparently moving forward, albeit somewhat clandestine. And amidst such abounding speculation, rumor must be separated from reality.
In the Senate, Majority Leader Harry Reid (D-NV) announced that he had scheduled a cloture vote on the only bill passed in the House so far, the Cut, Cap and Balance Act. That vote will take place Saturday morning. A cloture vote allows the Senate to place a time limit on the consideration of a bill. If an additional 30 hours of debate are requested, it must be approved by 60 members. Yet that possibility, as well as the chances of the bill itself passing in the Democratically-controlled Senate, are virtually nil. Much of that hopelessness was buttressed by the intensity of outrage the bill elicited from Democrats.
“What a sham! What a scam," said Senator Mikulski (D-MD). “I'd be tempted to just blow it off if it were not so cruel, stupid and dangerous." Tom Harkin (D-IA) ridiculed the name of the bill itself. “The cut isn't just a nick; the cut is more like an amputation: cutting the legs out from underneath the federal government,” Harkin said. “And the cap, is it just a small cap? I prefer to call it a decapitation: taking the head off the federal government's resources and the power to respond to the needs of our country.” Chuck Schumer (D-NY) called it a "DOA plan to cap, cut and kill Medicare."
Yet Reid remained firm. "I am committed to allowing a full and fair debate on this bill. I want the proponents and opponents of this bill to have time to air their views," he said, even as he expressed the hope the vote would happen sooner than Saturday.
The Cut, Cap and Balance Act would "cut" $111 billion in federal spending for FY 2012, along with providing a fixed "cap" on government spending relative to the Gross National Product over the course of a decade. It would begin at 22.5 percent of GDP in 2012, with decreases in spending levels reaching 19.9 percent of GDP in 2021. As for the "balance" part, the bill would require the passage of a Balanced Budget Amendment before raising the nation's debt limit.
Seemingly, only the cut and cap provisions are doable prior to August 2nd. But a Balanced Budget Amendment requiring approval by a two-thirds vote in Congress and three-fourths of the states' legislatures? August 2, 2012 would be a long shot. How do Republicans reconcile this? Legislative director Mike Jermain explained that if CC&B were passed, followed by the approval of two-thirds of each chamber of Congress required for a constitutional amendment, spending could be capped while awaiting the three-fourths approval of state legislatures necessary to pass such an amendment.
Meanwhile the other plan, commonly known as the "Gang of Six" proposal that originated in the Senate, reached the House. It was met with the same level of "enthusiasm" from House Republicans as CC&B received from Senate Democrats. The Gang of Six also elicited equal amounts of criticism. “In case Senator Reid didn’t notice, a bipartisan ‘Gang of 234’ just sent him the way forward. It’s called the Cut, Cap, and Balance Act," said Jim Jordan, chairman of the House Republican Study Committee. "The plan fails to significantly address the largest drivers of America's debt, and it is unclear how the goals of tax and entitlement reforms would be enforced," said House Majority leader Eric Cantor. Paul Ryan, the Republican chairman of the House Budget Committee, dismissed it as a "backroom bill."
But it gets even more curious regarding the Gang of Six efforts. As reported by several news sources earlier this week, this seemingly dead-in-the-water proposal was resuscitated by the return of Tom Coburn (R-OK) who "unexpectedly" rejoined the bipartisan group on Wednesday. That raised the hope, expressed by Senate Budget Committee Chairman Kent Conrad, that this package of debt reductions and tax increases would be "married" to the debt ceiling talks.
Twenty-four hours later, the marriage was off. Coburn announced that Cut, Cap and Balance stood the best chance of keeping the country from defaulting. "It's the only bill that has passed the House," Coburn contended. "It has a chance of meeting the August 2nd deadline. There are other ideas out there. The gang of six wasn't intended to be tied to the debt limit. There's no way it can be tied to the debt limit before August 2nd. This is our opportunity."
Maybe it is, but House Speaker John Boehner (R-OH) seemed intent on undercutting it. "Frankly, I think it would be irresponsible on behalf of the Congress and the president not to be looking at back-up strategies for how to solve this problem," he told reporters Thursday afternoon. "At the end of the day, we have a responsibility to act," he added. He also noted that while some House members who support CC&B might be unwilling to embrace any compromise if it fails in the Senate, he doesn't believe that the number of holdouts "would be anywhere close to the majority."
Who are the holdouts? The best indication was a report revealing that David Beers, managing director of sovereign and international public finance at the Standard & Poor's ratings agency, was scheduled to meet with the 87 "first-term Republican lawmakers" late Thursday. Mr. Beers was ostensibly going to warn those particular members, most of whom were voted into office on a platform of reforming runaway government spending, that there was a "50-50 chance the U.S. triple A credit rating could be cut within three months if nothing is done to meaningfully reduce the U.S. budget deficit."
This suggests that S&P has taken the side of Democrats in this debate. If not, it would seem far more logical to address members of the Senate, who haven't passed any debt ceiling legislation at all, and those Democrats who have indicated they will dismiss Cut, Cap and Balance out of hand.
Adding to the overall confusion are compromises best described as "mini-deals." The shortest one has been proposed by the White House, with the president now suggesting he would be amenable to an increase in the debt limit for "a few days," if negotiators agreed to the broad strokes of a deficit reduction deal, but needed more time to work out the details. Mini-deal number two was suggested by Sen. John Cornyn (R-TX) on Wednesday's “Kilmeade and Friends” radio show. "I think we need to take the cuts that are already on the table from the Biden conversations, which I understand are about one-and-a-half trillion dollars in savings," Cornyn told host Brian Kilmeade. Cornyn contended that such a compromise would extend the timeline for getting a bigger deal by "six months."
And the proposal by Sen. Mitch McConnell (R-KY), giving the president unilateral power to raise the debt limit in three stages with no conditions at all, is still alive. Despite bipartisan opposition in both houses, from Republicans who consider it an abdication of fiscal responsibility, and Democrats who don't want to get scape-goated, Senate Majority Leader Harry Reid and Minority Leader McConnell are keeping this seemingly last ditch effort to prevent default in the mix. House Budget Committee member Rep. Chris Van Hollen (D-MD), who is not a fan of the bill, explained that its “only virtue" is that it "recognizes that the United States has to pay its bills to avoid an economic catastrophe. But it is not an adult moment," he added.
Finally, the latest rumor. Thursday afternoon, the Washington Post reported that President Obama and top House Republicans were in "deep negotiations" regarding a package which would save $3 trillion over the next decade "through sharp cuts in agency spending and politically painful changes to popular health and retirement programs, but without any immediate increase in taxes." Mr. Obama was said to be negotiating with John Boehner and Eric Cantor regarding a plan the White House characterized as “to the right of the Gang of Six” proposal.
Predictably, Democrats were furious. “[When] we hear these reports of these megatrillion-dollar cuts with no revenues, it was like Mount Vesuvius,” said Sen. Barbara Mikulski (D-MD), who also indicated such a proposal would be rejected by Senate Democrats. “Many of us were volcanic.”
No doubt. Just as there's little doubt that the public is both confused and upset by the seemingly endless permutations of negotiations, along with the inaccurate and/or speculative reports accompanying them. To use an old expression, it would appear that the more things change, the more they remain the same. We're another day closer to August 2nd, and other than Cut, Cap and Balance, there isn't any other proposal that has been voted on in either house of Congress.
The only upside? C-SPAN is broadcasting the Senate debate on Cut, Cap and Balance. As I noted in a previous column, this is a grand opportunity for Americans to decide for themselves who has their best interests at heart, minus the media filter that far too often distorts the picture.
Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.com.