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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 BoehnerBoehner: 'Thank God' I wasn't in the middle of election Ryan delays committee assignments until 2017 Lobbying World 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 DurbinDick DurbinDem senator threatens to slow-walk spending bill Graham, Durbin 'encouraged' by Trump's comments on Dreamers GOP eager to see Harry Reid go 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 ReidSenate holds two-hour Biden lovefest Dem senator threatens to slow-walk spending bill The Hill's 12:30 Report 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 WarnerBudowsky: Did Putin elect Trump? Top Intel Dem: Congress 'far from consensus' on encryption Overnight Cybersecurity: Watchdog seeks release of Clinton aide's deposition 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 CoburnTom CoburnWill Trump back women’s museum? Don't roll back ban on earmarks Ryan calls out GOP in anti-poverty fight MORE (Okla.), a respected Senate conservative who had left the gang in May. He rejoined it Tuesday and endorsed its proposal. 


Sen. Lamar AlexanderLamar AlexanderSenate sends far-ranging medical cures bill to Obama's desk It’ll take at least two years to repeal and replace ObamaCare GOP eager to see Harry Reid go MORE (Tenn.), the chairman of the Senate Republican Conference, and Sens. Kay Bailey Hutchison (R-Texas), Richard BurrRichard BurrTop Intel Dem: Congress 'far from consensus' on encryption Trump must be an advocate for the Small Business Administration Dems pledge to fight Sessions nomination MORE (R-N.C.), Mark UdallMark UdallGardner's chief of staff tapped for Senate GOP campaign director The untold stories of the 2016 battle for the Senate Colorado GOP Senate race to unseat Dem incumbent is wide open MORE (D-Colo.), Michael BennetMichael BennetSenate passes college anti-Semitism bill Speculation and starting points: accreditation, a new administration and a new Congress The untold stories of the 2016 battle for the Senate MORE (D-Colo.) and Joe ManchinJoe ManchinSenate fight over miners' heathcare boils over Congress to clear path for Mattis Overnight Finance: Trump blasts Carrier's union leader | What's in the spending bill | Jamie Dimon gets perch for Trump era | AT&T, Time Warner execs grilled 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 ChamblissSaxby ChamblissWyden hammers CIA chief over Senate spying Cruz is a liability Inside Paul Ryan’s brain trust MORE (R-Ga.), Mike CrapoMike CrapoRyan lights Capitol Christmas tree Ex-Im faces new problems with Trump GOP debates going big on tax reform 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 McConnellMitch McConnellSenate fight over miners' heathcare boils over Congress to clear path for Mattis Senate holds two-hour Biden lovefest 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 FeinsteinDems push for panel to probe Russian interference in election Overnight Energy: Senate Dems set to fight water bill White House could make 'torture' report public, says Intel Dem 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.