Obama hails $3.7T Gang of Six plan as ‘good news’ in stalemate over debt limit

Obama hails $3.7T Gang of Six plan as ‘good news’ in stalemate over debt limit

Debt talks achieved a significant breakthrough on Tuesday as the Gang of Six unveiled a $3.7 trillion deficit-reduction proposal to praise from President Obama.

The proposal won quick support from key senators in both parties and from Obama, who hailed the framework as “good news” and praised it as “broadly consistent with the approach I’ve urged.”

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Wall Street also cheered — the stock market rallied shortly after Obama made his comments, with the Dow Jones Industrial Average surging more than 200 points on the day.

But the reaction to the plan was much cooler in the House, where Speaker John BoehnerJohn Andrew BoehnerJohn Feehery: A political forest fire Trump's pick for Federal Reserve chief is right choice at right time The two-party system is dying — let’s put it out of its misery MORE’s (R-Ohio) office said it appeared to fall short of House GOP goals in any grand bargain with the White House. Rank-and-file Republicans said they had yet to review the proposal.

Senate Democratic leaders, for their part, said there is not enough time to combine the group’s plan with a bill to raise the debt ceiling. It could take weeks or even months for the slim framework to be drafted into legislative language and scored by the Congressional Budget Office, sources said. 

Washington has less than two weeks to meet an Aug. 2 deadline, when the nation faces a possible default. Lawmakers and Senate aides alike wondered whether the Gang of Six had coalesced too late to have an impact on the partisan standoff. 

The only possibility would be for Obama to agree to a short-term increase in the nation’s borrowing authority, but Democratic leaders say that is unlikely.

“The Gang of Six plan has not been drafted, nor has it been scored by the CBO; it’s not ready for prime time,” said Senate Democratic Whip Dick DurbinRichard (Dick) Joseph DurbinDemocrats turn on Al Franken Minnesota's largest newspaper calls on Franken to resign Democratic senator predicts Franken will resign Thursday MORE (Ill.), a member of the Gang of Six, in reference to the Congressional Budget Office. “But as a concept, I think we have the starting concepts together and that’s what we presented today.”

The incomplete status of the framework leaves a bipartisan fallback plan under discussion by Senate leaders as the most likely vehicle for raising the debt limit by the start of next month.

That fallback plan would give authority to Obama to raise the debt limit by $2.5 trillion in three increments. It is expected to include $1.5 trillion in spending cuts and set up a special congressional committee to put together a deficit-reduction plan that would receive expedited consideration on the Senate floor. 

Senate Majority Leader Harry ReidHarry ReidBill O'Reilly: Politics helped kill Kate Steinle, Zarate just pulled the trigger Tax reform is nightmare Déjà vu for Puerto Rico Ex-Obama and Reid staffers: McConnell would pretend to be busy to avoid meeting with Obama MORE (D-Nev.) declined to endorse the Gang of Six’s work but said he would consider including elements in the contingency plan under discussion. He gave Sen. Mark WarnerMark Robert WarnerSenate panel moves forward with bill to roll back Dodd-Frank Comey back in the spotlight after Flynn makes a deal Warner: Every week another shoe drops in Russia investigation MORE (D-Va.) 24 hours to make suggestions. 

The plan from the gang was introduced to nearly 50 senators at a Tuesday morning meeting by the group’s three Democrats, two Republicans and GOP Sen. Tom CoburnThomas (Tom) Allen CoburnFormer GOP senator: Trump has a personality disorder Lobbying World -trillion debt puts US fiscal house on very shaky ground MORE (Okla.), a respected Senate conservative who had left the gang in May. He rejoined it Tuesday and endorsed its proposal. 


Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderOvernight Finance: Trump says shutdown 'could happen' | Ryan, conservatives inch closer to spending deal | Senate approves motion to go to tax conference | Ryan promises 'entitlement reform' in 2018 Senate approves motion to go to tax conference House conservatives, Ryan inch closer toward spending deal MORE (Tenn.), the chairman of the Senate Republican Conference, and Sens. Kay Bailey Hutchison (R-Texas), Richard BurrRichard Mauze BurrSessions argued presidents can obstruct justice in Clinton impeachment trial Trump Jr. to meet with Senate panel amid Russia probe Trump’s Russian winter grows colder with Flynn plea deal MORE (R-N.C.), Mark UdallMark UdallDemocratic primary could upend bid for Colorado seat Picking 2018 candidates pits McConnell vs. GOP groups Gorsuch's critics, running out of arguments, falsely scream 'sexist' MORE (D-Colo.), Michael BennetMichael Farrand BennetAvalanche of Democratic senators say Franken should resign GOP and Dems bitterly divided by immigration Schumer downplays shutdown chances over DACA fight MORE (D-Colo.) and Joe ManchinJoseph (Joe) ManchinTrump rips Dems a day ahead of key White House meeting Senate panel moves forward with bill to roll back Dodd-Frank Wealthy outsiders threaten to shake up GOP Senate primaries MORE (D-W.Va.) were among the senators who offered support. 

Warner and four other members of the gang, Sens. Kent Conrad (D-N.D.), Saxby ChamblissClarence (Saxby) Saxby ChamblissLobbying World Former GOP senator: Let Dems engage on healthcare bill OPINION: Left-wing politics will be the demise of the Democratic Party MORE (R-Ga.), Mike CrapoMichael (Mike) Dean CrapoOvernight Regulation: Feds push to clarify regs on bump stocks | Interior wants Trump to shrink two more monuments | Navajo Nation sues over monument rollback | FCC won't delay net neutrality vote | Senate panel approves bill easing Dodd-Frank rules Overnight Finance: GOP delays work on funding bill amid conservative demands | Senate panel approves Fed nominee Powell | Dodd-Frank rollback advances | WH disputes report Mueller subpoenaed Trump bank records Senate panel moves forward with bill to roll back Dodd-Frank MORE (R-Idaho) and Durbin, met for hours last week to make a final push to revitalize their proposal. 

They finally enticed Coburn to rejoin their group after offering $117 billion in additional Medicare and Medicaid savings. 

About three-quarters, or 74 percent, of the deficit-reduction target would come from spending cuts, and 26 percent from raising new tax revenues, according to the plan’s authors.

The proposal, which leaves most decisions up to committees of jurisdiction, would call for raising more than $1 trillion in new tax revenues by ending special tax breaks and shelters, boosting the Democratic argument that revenues should be part of any grand deficit-reduction deal.  It would be scored as a tax cut since it eliminates the alternative minimum tax, gang members said.

Grover Norquist, president of Americans for Tax Reform, has loudly criticized Coburn and the other Gang of Six members for contemplating tax increases. He said the gang’s new framework is an outline that doesn’t include enough specific information to determine whether it would raise or cut taxes or seriously reduce spending.

The plan adopts a two-track approach: a $500 billion down payment and a later reform bill generating an additional $3.2 trillion in deficit reduction. That later bill is largely left up to committees of jurisdiction, and they are only required to meet specific savings targets.

On healthcare entitlements, the plan would seek to hold the growth of spending to GDP plus 1 percent per beneficiary, but it largely leaves it up to committees to decide how to achieve the savings.

The overall deficit bill would be held at the Senate desk until a Social Security fix is found, and if that fix does not get the 60 votes required, the rest of the deficit plan is voided. The reform must ensure 75 years of solvency for Social Security, according to the Gang of Six, but how to achieve that is left up to the Senate Finance Committee. If Finance cannot agree, a group of 10 senators — five from each party — can bring a reform bill to the floor.

The proposed curbs to Medicare and Social Security spending drew a swift rebuke from some liberals.

“MoveOn’s 5 million members are counting on Leader Pelosi, Senate Majority Leader Reid and other Democrats to stand by their promise to reject any benefit cuts to Social Security and Medicare,” said Justin Ruben, executive director of MoveOn.org, a liberal advocacy group.

Some senators, such as Burr, suggested a short-term debt-limit increase to give lawmakers more time to flesh out the concepts established by the Gang of Six.

But Democratic leaders quickly dismissed that possibility.

“The president said he’d veto that and I’m opposed to it too — I think it’s a bad idea,” Durbin said. “With our economy in this precarious condition, short-term extensions of the debt ceiling, I think, would hurt us.”

Democratic aides said Tuesday that it would be very difficult to pair fallback legislation to raise the debt limit with the Gang of Six framework because the latter lacks many details.

Senate Republican Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGOP strategist donates to Alabama Democrat McConnell names Senate GOP tax conferees Brent Budowsky: A plea to Alabama voters MORE (Ky.) said a briefing he received at lunchtime on Tuesday was his “first exposure” to the gang’s proposal and he had yet to form an opinion on it.

At the Democrats’ Tuesday lunch meeting, Sen. Dianne FeinsteinDianne Emiel FeinsteinGrassley blasts Democrats over unwillingness to probe Clinton Avalanche of Democratic senators say Franken should resign Blumenthal: ‘Credible case' of obstruction of justice can be made against Trump MORE (D-Calif.) suggested that the special committee set up by the McConnell-Reid plan could use the Gang of Six’s framework as a starting point.

Durbin declined to comment on that possibility. He said the Gang of Six would meet again to discuss the next steps.