Impasse: House Passes “Cut, Cap, and Balance,” but Obama Rejects It, Wants “Gang of Six” Plan (video)
Posted By Vicki McClure Davidson on July 20, 2011
I don’t think I’m alone when I feel queasy about anything proposed for the government’s deficit reduction by a “Gang of Six.”
For the record, I detest and distrust the term “czars” for U.S. presidential advisors as well.
Here’s the mainstream media spin — from CNN, House passes GOP debt measure; Obama praises compromise plan:
Washington (CNN) — The U.S. House on Tuesday night passed the “cut, cap and balance” deficit reduction plan backed by tea party conservatives but dismissed by President Barack Obama, who offered strong praise for another proposal put together by a bipartisan group of senators.
The so-called Gang of Six plan — drafted by three Democratic and three Republican senators — presents a possible compromise to Obama and congressional leaders as they approach a deadline for a deal on cutting federal deficits in order to gain Republican support for raising the federal debt ceiling to avoid an unprecedented default.
It would cut the nation’s debt by about $3.7 trillion over the next 10 years — similar to the president’s call for roughly $4 trillion in savings.
Obama called the plan by the Gang of Six senators “broadly consistent” with his own approach to the current debt ceiling crisis because it mixes tax changes, entitlement reforms and spending reductions.
However, the top two Democrats in the Senate said they don’t think there is enough time before the government needs to borrow more money on August 2 to pass the comprehensive Gang of Six plan.
Meanwhile, the Republican-led House of Representatives voted 234-190 to pass the “cut, cap and balance” plan that would impose strict caps on all future federal spending while making it significantly tougher to raise taxes — the solution favored by hard-line conservatives.
That’s the liberal spin. Here is the flip side of the fiscal coin — from Washington Examiner, Beltway Confidential, Gang of six plan raises taxes by $3 trillion:
The Gang of Six “Bipartisan Plan to Reduce Our Nation’s Deficits” claims their tax reforms would be scored by the Congressional Budget Office as a $1.5 trillion net cut. But no details are provided on how they arrive at this number other than saying they will abolish the Alternative Minimum tax. So how can this plan claim to be a “balanced approach” (which means higher revenues), yet also claim to be a $1.5 trillion tax cut?
This probably means they are using a CBO baseline that assumes the AMT continues as written today and that the current Bush rates expire. Last August, the CBO said those policies would amount to a $4.8 trillion tax hike. Which means the the Gang of Six plan probably raises taxes by about $3+ trillion over current rates.
Wisconsin congressman Paul Ryan gets it.
Paul Ryan: Cut, Cap & Balance the Budget; Grow the Economy; Save this Country
Full transcript of Rep. Ryan’s eloquent, fact-based, reality-check congressional address from the video above:
The reason is because we are spending so much more money than we have. We can’t keep spending money we don’t have. 42 cents of every dollar coming out of Washington is borrowed money. Let’s take a look at where it’s coming from? We’re borrowing 47% of it from other countries, China’s number one.
Mr. Speaker: You can’t have sovereignty and self-determination as a country if we’re relying on other governments to cash-flow half of our deficit. This is where we are.
Here’s the problem we have right now, Mr. Speaker: We have a leadership deficit.
I keep hearing: the President has a plan, the President is offering balance. The President hasn’t offered a thing yet. Nothing on paper, nothing in public. Leading on reporters at press conferences is not leadership. Giving speeches, according to the CBO, is not budgeting.
The President did inherit a tough problem, no two ways about it. What did he do with this problem?
He drove us deeper into debt. A trillion dollars of borrowed money for the stimulus that was promised to keep unemployment at under 8%. It went up to 10% and now it’s at 9.2%. A stalled economy. A budget the President gave us that doubles the debt in five years and triples it in ten years. That’s not leadership.
What has the other body done in the Senate, our partners on the other side of the aisle? Mr. Speaker: It’s been 811 days since they bothered trying to pass a budget. Congress has gone for two years without a budget. What did we do when we assumed the Majority? We passed a budget, we wrote a budget. We did it in daylight, not in the back room. We drafted it, we brought it through the committee, we had amendments, we brought it to the floor, we debated it and we passed it. That is what we’ve done. And when you take a look at our problem, Mr. Speaker, you have to address what is driving our debt.
Here are the cold hard facts: ten thousand people are retiring every day. The baby boomers are here and we are not ready for them. Far fewer people are following them into the workforce. Health care costs are going up four times the rate of inflation. The Congressional Budget Office is telling us that Medicare goes bankrupt in nine years. Medicaid is already bankrupting our states. These are the drivers of our debt.
By the year 2025, three programs – Social Security, Medicaid and Medicare – plus our interest consume one hundred percent of all federal revenues. By the end of this decade, twenty percent of our revenues go to just paying interest. This is unsustainable. So what does our budget do? What does the document that we passed, that shows leadership on this issue, do? It saves these programs.
For Medicare, we say, you already retired, if you’re retired. If you’re about to retire, we don’t want to pull the rug out from under you, you organized your life around these programs, so let’s keep it as is. But in order to cash flow that commitment, in order to make good on that promissory note, you have to reform it for the next generation.
And let’s do it in a way that looks like the commission that President Clinton offered. A system that resembles the ones that we have as Members of Congress, where we get to choose the ones that meet our needs. We don’t subsidize wealthy people as much, and we subsidize low-income and sick people a whole lot more. That’s what a safety net is. We fix it and we save Medicare. What does the other body do? Excuse me, what does the law do that the President does? Raids half a trillion dollars from Medicare, puts a new board in charge of price controlling and rationing care to current seniors, and does nothing to save it from bankruptcy. These are the issues that have got to be dealt with.
Mr. Speaker, we keep hearing about balance. We keep hearing about the need to raise taxes as we cut spending – $3 for $1, or something to that effect. The red line shows Congressional Budget Office projections on spending, the green lines are taxes. Basically what this says is there is no way you can tax your way out of this problem. We asked the Congressional Budget Office, ‘if we try to do that – have balance, raise taxes – the tax rates on the next generation would be this: the lowest income tax bracket that lower income people play which is 10 percent, goes to 25 percent. Middle income tax payers pay a 66 percent rate. And the top tax rate which is what all those successful small businesses that create most of our jobs pay would go to 88 percent.’ That is according to the Congressional Budget Office. That is the path we are on right now. This is unsustainable.
What is needed is leadership and the reason we are talking about this debt limit increase is because we have seen none. None from the President, none from the other body, and if we are not going to have a budget process, how on earth are we going to get spending under control so we can solve this problem.
Our budget, this cap and this cut, gets the debt paid off. It puts us on a path to prosperity. It closes loopholes to lower tax rates to grow jobs. It says the genius of America is the individual, is the business, not our government. It maintains the American legacy of leaving the next generation better off, which we know without-a-shadow of a doubt, we are leaving the next generation worse off.
In the good-ole-days of 2007 we use to say that this debt was a threat to our children and our grandchildren. Not so anymore, it is threat to our economy today. Pass Cut, Cap, and Balance, save this country, grow the economy, and save the nation for our children and our grandchildren. And with that, I yield.
From Big Government, House GOP Passes ‘Cut, Cap and Balance’ Plan; Trims Spending by $6 Trillion:
Defying a veto threat, the Republican-controlled House voted Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default.
The 234-190 vote marked the power of deeply conservative first-term Republicans, and it stood in contrast to rising support at the White House and in the Senate for a late stab at bipartisanship to solve the nation’s looming debt crisis.
President Barack Obama and a startling number of Republican senators lauded a deficit-reduction plan put forward earlier in the day that would include $1 trillion in what sponsors delicately called “additional revenue” and some critics swiftly labeled as higher taxes.
[...]
But a few hours after Obama spoke at the White House, supporters of the newly passed House measure breathed defiance.
“Let me be clear. This is the compromise. This is the best plan out there,” said Rep. Jim Jordan, R-Ohio, head of a conservative group inside the House known as the Republican Study Committee.
The legislation, dubbed “Cut, Cap and Balance” by supporters, would make an estimated $111 billion in immediate reductions and ensure that overall spending declined in the future in relation to the overall size of the economy.
It also would require both houses of Congress to approve a balanced budget amendment to the Constitution and send it to the states for ratification.
Paul Ryan on WH’s Disappointing Lack of Leadership & Fiscal Sanity
From Michelle Malkin, Talking turkey:
President Obama was back in front of the cameras and teleprompter again this afternoon to provide a chirpy update on the debt limit negotiations.
He waved his pom-poms for the emerging Gang of Six or Seven talks and commanded political opponents to “put aside their differences” and “talk turkey.”
What we need is government to go COLD turkey on its bottomless spending binges.
For those of us who have watched the last trio of vague, demagoguery-clogged Obama pressers, he IS the talking turkey.
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