Dems Offer Three Options on Debt Limit

by Andrew Stiles

At a weekly GOP conference meeting, House Majority Leader Eric Cantor (R., Va.) presented members with three options laid out by Democratic negotiators in the ongoing discussions over the debt ceiling. As Rep. Bill Flores (R., Texas) told NRO following the meeting, there remains “a wide gulf between what Democrats want and what we think is feasible in terms of resetting the fiscal ship for our country.” The three options are as follows:

Option 1: The Harry Reid proposal:

  • “Some” discretionary cuts
  • No changes to entitlements
  • No changes on the taxes
  • Total savings: less than $1 trillion

Option 2: The Obama/Biden framework:

  • Discretionary cuts: $1.1 trillion
  • Mandatory cuts: $500–$700 billion (about $340 billion in health care, $260–$330 in other mandatory)
  • Interest savings: about $300 billion
  • “Modest” changes to Medicare (e.g., means testing, increase in co-pays)
  • No changes to Social Security
  • Some revenue neutral tax reforms
  • Total savings: about $2 trillion

Option 3: “The Big Deal”

  • Discretionary cuts: $1.2 trillion
  • Slightly more significant changes to Medicare (e.g., increase retirement age, means testing, benefit structure)
  • Social Security Consumer Price Indexing (CPI)
  • “Massive” future savings in out-years
  • De-coupling Bush tax rates on upper income brackets
  • $1 trillion in “new revenues”
  • Comprehensive tax reform, to be completed by agreed upon date
  • Total “savings” (with tax increases): about $4 trillion

Congressional leaders resume talks at the White House this afternoon.