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Obama, Boehner and Reid: Debt-Ceiling Follies

Obama, Boehner and Reid: Debt-Ceiling Follies

By Carl M. Cannon - July 26, 2011

Eight days before a much-dreaded reckoning that will come if they cannot agree on how to deal with the federal government's burgeoning debt, three principal players in Washington's latest drama produced a day of dueling speeches, press conferences, and budget blueprints. When the performances were concluded, an agreement seemed only slightly more likely than before -- and the nation's fiscal future as clear as mud.

First out of the chute on this frenetic Monday was Senate Majority Leader Harry Reid. His plan is to raise the debt limit and offset that vote with a series of proposed spending curbs that seemed abstract at best. Even while supporting it last night, President Obama conceded in passing that Reid's plan did not constitute "serious deficit reduction."

The Nevada Democrat claims to have identified $2.7 trillion in spending cuts over the next 10 years. The first $1.2 trillion comprises trims in discretionary federal spending on which White House negotiators and House Republicans have already signed off. They included:

  • $1 trillion in Department of Defense cuts anticipated by the phasing down of the wars in Iraq and Afghanistan.
  • $400 billion supposedly saved by lower interest payments -- on the very debt being discussed.
  • $100 billion in unspecified savings in mandatory programs, including $40 billion in something called "program integrity savings," which is apparently Democratic Party-speak for Reagan-era "waste, fraud, and abuse."

Reid insisted that his proposal "provides everything" House Republicans have requested. Reid punctuated that assertion with a taunt that amounted to a preview of the Democrats' possible talking points in coming elections. "If they now oppose an agreement that meets every one of their demands, it will be because they have put politics first and the good of this nation and economy last," Reid said.

The closer one looked at the Reid proposal, however, the less there was to grab ahold of. For starters, the money to be "saved" by the winding down of military operations in Iraq and Afghanistan is theoretical. That money had neither been appropriated, nor spent: the figure was based on a Congressional Budget Office guestimate that accountants call "a plug" -- a number to plug into to future planning documents -- and nothing more.

"The savings are not real," noted Gordon Adams, a veteran of the White House Office of Management and Budget during the Clinton administration. Adams described the supposed savings as "a political fraud on the American people."

Much of the rest of the Reid plan -- $400 billion savings from lower interest rates, listing another $1trillion in spending reductions, including reducing government waste -- were either unspecified or speculative. Both The Washington Post and House Speaker John Boehner used the same phrase, "accounting gimmicks," to characterize it.

Next in the barrel was the House Republican leadership, led by Boehner, with the conservatives' counteroffer: It would require two congressional votes on raising the debt ceiling -- one now and the second sometime next year -- as a way of ensuring that the cuts are real. In the GOP scenario, $1.2 trillion worth of spending cuts over the next 10 years would be identified in the next few days, accompanied by the creation of a new 12-member congressional committee that would find ways to reduce government spending by $1.8 trillion over the next decade, presumably from entitlement spending.

The Boehner plan also sets a timetable for Congress to vote on a balanced budget amendment to the Constitution, which Boehner said would take place by the end of 2011.

Publicly, Boehner said the same thing at a 4 p.m. press conference that he'd previously told his own caucus: That the measure was "not perfect," but the best way to induce a Democratic Senate and a Democratic White House to actually reduce federal spending. And it has no new taxes, he stressed, knowing that such a requirement is a prerequisite for most of the 87 House freshmen whom Boehner only marginally controls. But to the financial markets, such an approach is also a sign that Republicans are more concerned with curbing government spending than corralling government debt.

In a tacit concession that his plan, like Reid's, also defers the toughest decisions until later, Boehner stressed the balance budget amendment aspect of his proposal -- a condition also insisted on by Tea Party conservatives -- who put much stock in amending the Constitution. "The ultimate enforcement mechanism for out-of-control government is for America to have a balanced budget amendment," Boehner dutifully told reporters at the Capitol.

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Carl M. Cannon is the Washington Bureau Chief for RealClearPolitics. Reach him on Twitter @CarlCannon.

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