By Alexander Bolton - 07/26/11 01:34 AM EDT
Senate Democratic leaders on Monday introduced a $2.7 trillion deficit-reduction plan and dared House Republicans to oppose it.
Senate Majority Leader Harry Reid (D-Nev.) bluntly challenged Speaker John Boehner (R-Ohio) to face down what he called the Tea Party “extremists” in the lower chamber by backing his proposal to raise the debt ceiling.
“The time for ideological extremism should end; now is the time for cooperation and consensus-building, and that’s what legislation is all about, the art of compromise, and they’ve got to break away from the extremists that seem to be running the Republican Party in Washington,” Reid said of House Republican leaders.
Boehner responded swiftly with a rebuke of his own.
“I believe that the [Reid] plan is full of gimmicks. We’re not making any real changes in the spending structure of our government. And it doesn’t deal with the biggest drivers of our deficit and our debt, and that would be entitlement programs,” Boehner told reporters at a news conference shortly after Reid spoke
Boehner introduced a plan Monday that would include $1.2 trillion in discretionary cuts. It would also create a special congressional committee to propose a future deficit-reduction package that would be guaranteed up-or-down votes.
The major difference with Reid’s proposal is that Boehner’s plan would at first raise the debt by only $1 trillion. A later $1.6 trillion increase would be contingent on passage of the deficit-reduction plan from the special committee.
Sen. Jim DeMint (R-S.C.), a member of the Senate Tea Party Caucus, bashed both proposals.
“The plans released by both parties today fail to take our debt crisis seriously and will invite a downgrade in America’s credit rating,” he said in a statement.
“Instead of serious reforms, both punt the hard decisions and create another useless deficit commission that won’t offer real solutions and would likely result in tax-increase recommendations that destroy jobs,” he added.
Reid’s proposal would pair the cuts with an increase in the debt-limit sufficient to extend federal borrowing authority beyond the 2012 election. Reid emphasized that Democrats would reject a short-term increase in the debt limit because it would create uncertainty in the financial markets.
Reid vowed to bring the plan to the Senate floor immediately.
The White House quickly praised it.
“Sen. Reid’s plan is a reasonable approach that should receive the support of both parties, and we hope the House Republicans will agree to this plan so that America can avoid defaulting on our obligations for the first time in our history. The ball is in their court,” said White House press secretary Jay Carney shortly after Reid’s news conference.
Senate Republican leader Mitch McConnell (Ky.) was careful not to attack Reid’s plan. Instead, he endorsed Boehner’s alternative.
McConnell claims Reid supported Boehner’s framework before Obama rejected it at a White House meeting on Sunday.
Reid denies he ever backed a proposal to raise the debt limit by an amount that would require another vote on the issue before the 2012 elections.
Senate Minority Whip Jon Kyl (R-Ariz.) told reporters that Senate leaders are negotiating, seeking a compromise that could pass the upper chamber.
Democrats echoed Kyl’s remarks.
“I think it will be demonstrated clearly at the end of the week that the Boehner approach is not going to pass the Senate. Then the question is whether the senators, Democrats and Republicans, can come up with a more reasonable, moderate approach to solving this problem,” said Senate Majority Whip Dick Durbin (D-Ill.).
“I’ve said good words about Mitch McConnell,” Durbin added. “He understands the gravity of the situation in a way that John Boehner does not.”
Sen. Charles Schumer (N.Y.), the third-ranking member of the Senate Democratic leadership, said House Republicans have no rationale for opposing the savings, because they included them in the House-passed budget plan earlier this year.
“We know the Republicans agree with this math, because they included the exact same savings in the Ryan budget that passed the House. They never criticized such accounting then; it’s hard to see how they could do so now,” Schumer said.
Schumer described the spending cuts as “a serious belt-tightening that will have consequences for years to come” and said they were very difficult for Democrats to accept.
Reid’s work finally gives Senate Democrats a deficit-reduction package they can call their own. Republicans have bashed them for months for failing to put out a detailed deficit-cutting plan, in contrast to the House, which passed an austere budget blueprint and its “cut, cap and balance” measure.
Democratic members of the Senate Budget Committee said they had agreed to a budget earlier this month, but they have yet to release documentation of it.
Reid’s package would cut discretionary spending by $1.2 trillion over 10 years and mandatory spending by $100 billion.
Democratic aides said that Boehner had agreed to the $1.2 trillion in discretionary cuts during private negotiations and other GOP leaders backed the $100 billion in mandatory cuts during talks with Vice President Biden.
It would generate $40 billion in program integrity savings by reducing waste, fraud and abuse; $30 billion by reforming the housing giants Fannie Mae and Freddie Mac; $15 billion through spectrum sales and reform of the Universal Service Fund; and $10 billion to $15 billion through agriculture reforms.
But House Republicans panned it for relying on what they called “budget gimmicks” for $1.2 trillion in savings.
Specifically, Reid counts $1 trillion from winding down the wars in Afghanistan and Iraq. He budgets $630 billion for those conflicts, the amount President Obama estimates he’ll need, instead of the $1.67 trillion projected by the Congressional Budget Office (CBO).
Republicans argue the CBO estimate fails to account for Obama’s stated intentions in Iraq and Afghanistan. They say those savings are not real because they would happen regardless of a debt-ceiling deal in Washington.
“Obama ran on getting us out of Iraq and Afghanistan and he has begun the troop drawdown in Afghanistan,” said a GOP aide. “Everyone knows that the wars aren’t going to be spending out as CBO projects over the next 10 years.”
Reid’s plan counts an additional $180 billion in interest savings that would have been paid if the federal government borrowed a full $1.67 trillion to maintain current troop levels.
It would also establish a special bipartisan committee made up of 12 members to recommend another round of deficit cutting that would receive guaranteed up-or-down votes on the Senate floor by the end of 2011.
Some liberals say Reid’s proposal falls short because it does not increase tax revenues to cut the deficit.