What’s so bad about the Reid plan?
The big sticking points between the House GOP leadership and Sen. Harry Reid’s latest plan are 1) the House wants two debt increases, one this year and one next year (Reid has just one increase) and 2) the House Republicans want a guaranteed balanced-budget-amendment vote.
Regarding the Reid plan itself, it really looks like a Republican plan: A $2.7 trillion spending cut to raise the debt ceiling by something like $2.5 trillion, and no tax revenues. So, really, what’s so bad about the Reid plan? Increasingly, Wall Street gurus want one debt-ceiling increase, not two.
The Reid package includes $1.2 trillion in discretionary-spending cuts and a small $100 billion savings in mandatory accounts, apparently from the Biden meetings, although it will not impact either health care or Social Security.
There are other nicks and knacks from waste, fraud, and abuse, fees on Fannie Mae and Freddie Mac, revenues from spectrum sales, and some sort of farm-subsidy reform. And there is, of course, a huge $1 trillion piece from winding down the wars in Iraq and Afghanistan. But that’s also in the budgets from Paul Ryan and the CBO. Interest savings come to $400 billion.
Reid’s plan also includes a Mitch McConnell-like joint-congressional committee to find future savings. The committee’s recommendations will be guaranteed an up-or-down Senate vote without amendments by the end of 2011.
The GOP House plan undoubtedly has more real spending reduction. Plus, the balanced-budget amendment, which makes it consistent with cut, cap, and balance.
But the Reid no-tax piece is really important in terms of economic growth. At least things may not get worse on the tax front.
Finally, all these plans hinge on tough enforcement for the spending caps. In particular, first-year 2012 savings, and then sequestration penalties. It just looks like the House and Senate are coming together.
This is what's wrong with it:
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Which plan makes the DEBT CLOCK(External Link
) start to run backwards?
Mmm... neither? Thought so.
They are all playing games.
Reply to this commentLinkReport AbuseExactly right. Until someone puts forth a plan that cuts current spending below current revenue we're screwed.
Reply to this commentLinkReport AbuseWho cares what "Wall Street gurus" want? I've never seen a more self-interested group in my life.
Reply to this commentLinkReport AbuseReid's plan is smart politically, and I would be in favor of it because it doesn't raise any revenue. It's just cuts - or supposed cuts. Ryan's budget includes the same assumptions.
Reply to this commentLinkReport AbuseWhat Reid plan?
The only thing Reid has is a number.
It is nothing more than "Raise Debt Limit Now, Spending Cuts Never".
If debt-holders and markets get snookered by this kind of "plan", maybe they deserve default.
Reply to this commentLinkReport AbuseSounds good, but I honestly don't trust the numbers Reid or Pelosi throw out. Most of the "savings" they tout end up being phantoms that vanish under scrutiny.
I do wish the House GOP would drop the BBA, though. I want balanced budgets, but I am not convinced that it should be ensconced within the U. S. Constitution.
Reply to this commentLinkReport AbuseJefferson came to a different conclusion a few years after the Constitution was ratified. He lamented the fact that there was no Constitutional provision (or more specifically, prohibition) on federal borrowing.
It's probably irresponsible to pretend to understand what the Founders would think about a contemporary economic problem. But, I think it's fair and safe to assume all - even Hamilton - would be aghast at adding more than a on-trillion dollar annual budget deficit to the already existing 15T debt.
Congress is addicted to other people's money. If they aren't stopped constitutionally, they'll NEVER be stopped.
Reply to this commentLinkReport AbuseLarry, why choose the obviously weaker Reid plan over the obviously better Boehner plan????? That makes no sense!
Reply to this commentLinkReport AbuseProbably because the Reid plan will pass and be signed.
Reply to this commentLinkReport AbuseThe Reid plan has no chance of passing in the House, and might not pass in the House. It's full of gimmicks and illusory cuts.
The audience for the plan is the news media, not Wall Street, the ratings agencies, or the House. They want their comrades in the MSM to parrot this plan as a big Democratic compromise when it is nothing of the sort.
Reply to this commentLinkReport AbuseLarry "Dow 50,000" Kudlow really is that thick, isn't he?
Reply to this commentLinkReport AbuseGuys? This is a Republican plan. It has everything conservatives initially asked for.
Its time to declare victory and go home. Cast the "Reid Plan", already endorsed by the White House, as a capitulation to GOP demands because 1. That's politically smart, and 2. Has the added virtue of being true.
If that's not what happens, and a plan that meets every GOP benchmark from the initial negotiating position is rejected, the President will hammer conservatives as being disingenuous and solely about attacking anything he supports. He'll claim conservatives want default, and given the substance of the "Reid Plan" that talking point may sprout legs.
This is a win. Let's call it that.
Reply to this commentLinkReport AbuseI would disagree - this is NOT a GOP-like plan. This is like all other Democratic plans: 2 parts BS, 2 parts distant cuts, 1 part make-believe, and 5 parts fool the public and GOP with a dash of "gotcha" added on. The Dems have $1.2 t in make-believe cuts through termination of the war. My guess is that the other $1.2 t are in years 8,9, and 10 and consist of mainly accounting gimmicks.
Plus, why is it everyone is agreeing to extend a debt ceiling longer than a fiscal year? Shoot, the Dems haven't put a budget together for almost 3 years, certainly we can take this a little slower, put a ceiling out there for maybe 1 year. Then it SHOULD enter the political fray. Obama and the GOP candidate should be able to debate the topic so the American public has the ultimate say. Obama the deceiver, would rather defer everything till after his election. OF course, given that he'll be at home in Chicago by then, I guess it's a moot point.
Reply to this commentLinkReport AbuseWell, if they're pretty much the same then I'll go for the Boehner plan just for the pleasure of seeing King Putt sign off on it.
Reply to this commentLinkReport AbuseThe balanced budget amendment is a gimmick and a distraction (as Keith Hennessey noted). Do people know how long it would actually take to enact a BBA?
I definitely favor a cap on spending as a share of the economy.
Reply to this commentLinkReport AbuseReid's plan would raise the debt ceiling to 2.5 trillion.
Obama wants to raise the debt ceiling to 2.4 trillion to carry him to the next election.
That is all I need to know.
Reply to this commentLinkReport AbuseWhen they cut for 2012, get back to me. Anything else is a lie. IIRC, in 2009, the CBO projected an $800 Billion deficit for this year - and how did that work out?
10 year projections only make lying easier. Cut now!
Reply to this commentLinkReport AbuseRoss Perot (not my favorite politician) stated that after GM had purchsed E-systems that if someone at GM saw a snake, they would appoint a committee to check to see if it was in fact a snake and what kind, and then another committee to see if something needed to be done about it. He stated at E-systems if someone saw a snake, they went and got a hoe and killed it. All these committees to look into these matters is an exercise in futility. Congress needs to do what they were elected to do....address the issues by a vote on the floor and not send all of the "negoiations" into committees behind closed doors.
Reply to this commentLinkReport AbuseIt was EDS (Electronic Data Systems) not E-Systems. E-Systems was a defense contractor also in Texas.
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