Speaker Boehner has been quoted as saying that his proposed plan to raise the debt ceiling is “not perfect.” Okay. How, then, does it stack up as a matter of policy? And what about the Reid alternative?
Timing. A timely increase in the debt limit is imperative. (A video is worth 10,000 words.) The Boehner plan is a way to meet the need to raise the debt limit. Moreover, the Boehner plan forces Congress to address entitlements sooner (six months) rather than later. Good on both fronts.
Size. I have never been a member of the “size matters” club. Instead, I think that markets are more interested in the quality of the policy addressing the debt problem. The projected debt explosion is fundamentally a spending explosion, so policies that address growth will be more convincing to markets than a “large” deal that is dominated by a futile attempt to tax away the problem.
Composition. By the standards of historic budget agreements, the Boehner plan is off the charts. See the chart below from the Congressional Research Service.
First, there is not a single dime in taxes. David Addington at the Heritage Foundation has argued that the Boehner plan “greases the way for tax hikes.” This is truly unhinged. The Boehner plan envisions a “select committee” of six Republicans and six Democrats that would require a majority vote — that is, seven votes — to propose entitlement reforms for an up-or-down vote in Congress. The six Republicans (and any Democrats who are not renting their brain from an amoeba) can easily stop any notion of tax increases. And there is simply zero chance that the House would pass such an increase if it did emerge over the next six months.
Second, there are real cuts in FY2012 discretionary spending, caps on future spending, and an enforcement process for those caps. One might argue for more aggressive cuts up front and there will be concerns over the ability of future Congresses to slip the discretionary caps. But on the whole, this is as good a package of discretionary spending controls as can be written.
Third, the “select committee” process ties future debt-limit increases to entitlement reform. Since the heart of the debt problem is broken entitlements, this linkage is entirely appropriate. While less ideal than actual reforms themselves, the committee forces future action on the most pressing policy issue facing the United States.
Comparison to Reid Plan. The plans are quite similar. Indeed, the best way to think about the Reid plan is that it is simply the Boehner plan with fake cuts (largely war spending) added on. Put differently, executing the Reid plan is the same as executing the Boehner plan and then adding an unrestricted debt limit increase on at the end. Since so-called “clean” increases are a signal to markets that the U.S. cannot address its fundamental problems, this is extremely dangerous and undesirable.
The bottom line. The ideal debt-limit package would combine up-front discretionary cuts with medium-term discretionary controls and real policy changes to entitlement programs that address the spending explosion and display to international capital markets the ability of the United States to address the debt threat. The Boehner plan is not ideal, but certainly is a strong B+. The Reid plan, in contrast, is a gentleman’s C at best. And, of course (see here), those who fail to turn in their homework get an F.
Wait, wait. I got lost there. The Boehner plan has essentially zich in up-front discretionary cuts, makes no actual changes to entitlement programs, and does nothing to assure the international capital markets that anything serious is being done on Capitol Hill... but somehow it gets a B+?
Talk about grade inflation. What kind of curve are we using?
Reply to this commentLinkReport AbuseI thought the post laid it out fairly well.
Boehner's plan:
1. has actual cuts in discretionary spending;
2. does not increase taxes (nor create a requirement for tax increases down the line); but
3. does require the Senate and House (and thus the President) to go on record with an actual plan to deal with our unsustainable entitlements.
The alternative is not Cut, Cap, and Balance. That plan is something that only a change in the Presidency could accomplish.
The alternative, because the President is willing to do so, is to throw the economy off of a cliff and gamble that the blame will be placed on the Republicans for it (ending the Republican control of the House and putting Pelosi back in charge), with the help of the mainstream media.
You think he'll flinch. I don't. I think he's that reckless and irresponsible. I think that he'll say: ok, we need an immediate cut in 43% of our spending outlays, and can't touch debt repayment or social security (which is part of debt repayment).
And so very soon the unemployment checks will stop, medicare and medicaid payments will be delayed, no more permits for new drugs, no regulatory oks that are required to keep plants operational, federal prisons will release prisoners, the borders will go unmanned, customs agents will be furloughed so that it's impossible to fly in or out of the country without 5 hour lines (instead of the current 1 hour lines), etc. And he'll blame it on the Tea Party and "irresponsible Republicans," which the media will repeat ad nauseum... and I'll thank people like you and Representative Jordan for getting Nancy Pelosi re-elected as Speaker and the president re-elected as well, with a huge push towards leftism coming immediately thereafter.
All because people don't have the maturity or patience to do things step by step, but like 11 year olds cry "I WANT IT NOW!"
Reply to this commentLinkReport AbuseWith TheRealGrant's indulgence, another way to list the high points would be (see bracketed additions):
Boehner's plan:
1. has actual cuts in discretionary spending [reverses Obama's call for ever more spending, er 'investments', thereby eroding his base]
2. does not increase taxes (nor create a requirement for tax increases down the line); but [forces a total cave-in by Obama who has said he'd veto anything without tax increases, er, 'revenue enhancements', thereby eroding his base]
3. does require the Senate and House (and thus the President) to go on record with an actual plan to deal with our unsustainable entitlements. [forcing Obama off his habit of never committing to anything, let alone in writing].
(Forgive me, TheRealGrant, for poaching your post, especially if you don't agree with additions.)
Reply to this commentLinkReport AbuseI sure appreciate you guys trying to help out a dolt like me.
So these cuts in discretionary spending you're talking about - this is the massive $7 billion dollar amount (for which the ceiling gets raised another trillion)?
And item two is that Boehner's plan is to be credited for not raising taxes? How is that different from doing nothing at all? Wouldn't that not raise taxes either? (Look, I'm trying here.)
And finally, everyone goes on record with an actual plan to deal with the entitlements? And the plan is, we'll appoint a bunch of Congressional bigwigs to decide on it amongst themselves? How is that different from what they're refusing to do right now?
Man, I just can't get the hang of this stuff.
Reply to this commentLinkReport Abuse@Henry - great additions.
@Cincinnati:
5 questions for you.
1. Do you think Harry Reid is EVER going to allow something that meaningfully restricts government growth (much less actually requires government contraction) to even get to the President's desk?
2. Do you think the President is willing to either ignore the debt ceiling (which the Courts won't stop - political question doctrine) or allow an economic catastrophe rather than sign something that would meaningfully restrict his ability to grow government (much less force contraction), if it even got to him?
3. Do you think that the government can reduce its spending by 30-40% on a day's notice - where 60% of that spending is already committed to debt repayment and the entitlement programs, without significantly hurting the economy and military operations (possibly costing lives)?
4. Do you think that the President would prioritize in a way that helps the economy, or hurts the economy and maximizes suffering, knowing that the media is on his side?
5. Do you think that, particularly with every mainstream media outlet on his side, the Republican's chances of winning the Presidency and Keeping the House of Representatives would go up or down if there's serious economic harm from not having a debt ceiling increase if Republicans do not have a strong story line of Obama rejecting multiple, reasonable offers to raise it?
Which, actually, leads me to question number 6: how much are Obama and Pelosi paying you, Mark Steyn, Jim Jordan and the rest to make sure that Queen Pelosi is speaker again and Obama gets his 2nd terms and leftist transformation of this country?
Reply to this commentLinkReport AbuseI agree with you. Not raising the debt limit is both economic AND political suicide for Republicans. Obama would like nothing more...
Reply to this commentLinkReport AbuseGee, Grant. You start off with condescension, shift to juvenile insults, take a turn with huffy queries, and then finish with a flurry of lunacy. I don't know what to think of it all. But here, chew on this.
You seem big on wondering how various characters are going to act in this developing situation. Me, not so much. I primarily think in terms of what the people representing me should be doing, and letting the chips fall where they may.
Our guys are supposed to be cutting spending, not coming up with excuses why they can't. We've had decades of excuses, and we're nearly at the end of our rope. To the devil with the opposition. It's time to act - it always is. So let our side be clear, bold, and resolute. If we are, then our fellow Americans will respond favorably. But if our side tries to play it cute with lame, weak-kneed, half-measures - then we'll take it in the neck.
It's time to fight. The wimps should clear out the back door.
Reply to this commentLinkReport AbuseJust in case anyone is interested, here's an excellent graphic of what our debt looks like; unfunded liabilities included
External Link
Reply to this commentLinkReport AbuseExcellent analysis Mr. Holtz-Eakin.
"What kind of curve are we using?"
The curve of the possible, not the curve of the ideal.
Reply to this commentLinkReport AbuseOh yeah, that whole curve of the possible thing. The one that got us into this mess.
Reply to this commentLinkReport AbuseThanks for the analysis.
Seems to me that if this were to pass both the House and Senate, the battle over whether to raise taxes would be won for the time being. And that is not a small thing, esp. given Obama's demagoguery last night.
I'll trust Boehner on this. But just this once, tho . . .
Reply to this commentLinkReport AbuseBoehner = B+
Reply to this commentLinkReport AbuseReid = C
Obama = "Present!"
funny..., genuinely a remark of humor. Thanks for a much needed laugh. mb.
Reply to this commentLinkReport AbuseYo .... We're playing poker here..... C-
Reply to this commentLinkReport AbuseLet's play chess and think a few moves ahead.
1. Boehner's plan is modified enough over the next few days to secure sufficient GOP votes to pass. It gets scuttled in the Senate just like Cut, Cap & Balance.
Reply to this commentLinkReport Abuse2. Reid's plan makes it through the Senate.
3. Reid's plan is amended in the House to look much like the modified Boehner plan and passed.
4. The different bills go to Conference. Real cuts are doubled, caps are strengthened, must vote on Balanced Budget Amendment, and it's all done in one pass (what Obama REALLY wants). Lots of grumbling, but it passes the House & Senate.
LightRay9a1
Reply to this commentLinkReport AbuseThat's a possible if not likely train of events.
If Boehner's plan didn't continue the debt ceiling fight into next year, it might be acceptable. No one wants to continue this debt limit battle through next year, except for Republicans trying to continue bashing Obama for election advantage. In fact, I wonder if Republican presidential candidates are the ones who want to keep this battle front and center.
Reply to this commentLinkReport AbuseI am so frustrated at the 'defloit Don' BO. This POTUS thinks only of himself and his "do-yo-thing--but re-elect me..." The U.S was not built on the 'gimme' platform. If there is an element that needs to be investigated it will be in the "TOO BIG to fail.". Princess Obama needs to Q the small businesses whao went under, as a result of 'too big to fail.'. I am So frustrated by this prom queen who says and does what he needs to do and say to maintain a (pathetic) but obstructionist, socialist profile.
Reply to this commentLinkReport AbuseSo what are you saying Mary? Like B minus?
Reply to this commentLinkReport AbuseNo... BO needs to be left OUT of the negotiations. It's pretty simple. Look at EVERYTHING BO has invested himself in. His #1 priority was to bolster himself----He is a poser, not worthy of an American President.. love, mb.
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