Democrats offer debt plan they say GOP "can't refuse"
Updated 5:24 p.m. Eastern Time
Senate Democrats unveiled a plan to raise the debt ceiling Monday that abandoned President Obama's call for revenue increases as part of a deal, putting forth a plan they said would cut spending by $2.7 trillion.
"This is an offer that Republicans can't refuse," Sen. Charles Schumer said. Just hours later, House Speaker John Boehner decried the plan as "full of gimmicks."
The Democratic plan, which would increase the debt ceiling through the end of next year, would include a $1.2 trillion reduction in both defense and non-defense discretionary spending. It also counts $1 trillion in spending cuts from winding down the cost of the wars in Iraq and Afghanistan, something critics say should not count in the total savings.
Senate Majority Leader Harry Reid, joined by Schumer, unveiled the plan Monday afternoon in a combative news conference in which they ruled out a rival plan from House Republicans that would create a two-step process for a debt limit increase.
"Republicans' short-term plan is a non-starter in the Senate, and in the White House," Reid said. Schumer called the plan a "dodge," adding, "Does anyone think it would be a good idea to do this all over again in six months?" Both Democrats quoted financial analysts suggesting a short-term extension could result in a downgrade in the U.S. credit rating.
House Republicans formally unveiled their plan late Monday afternoon. It mandates immediate cuts and caps in discretionary spending, potentially saving $1.2 trillion over a decade. In exchange, the debt ceiling would be raised by less than $1 trillion, enough to last the nation through the end of the year. The as-yet-unspecified spending caps would trigger automatic across-the-board spending cuts if not met.
The GOP plan then creates a 12-member "Joint Committee of Congress" that would additionally identify $1.6 to $1.8 trillion in deficit reduction over a decade. The House and Senate would consider those savings in an up-and-down vote, without amendments. If the plan passes, President Obama could then request a separate, $1.6 trillion debt limit increase.
"I think it would be irresponsible for the president to veto such legislation because it is a commonsense plan and it would avoid default," Boehner said at a press conference shortly after the Democrats unveiled their plan. Rep. Kevin McCarthy said the time had come for President Obama to start "putting people over politics."
During a closed-door meeting with his caucus Monday, Boehner suggested the votes are not there to pass the Reid plan. He said the GOP plan has the necessary votes and that the president will thus be forced to sign it. Boehner also called on his caucus to stick together to achieve Republican goals.
That's not happening. In a statement Monday afternoon, Republican Study Committee Chairman Jim Jordan said he opposed the Boehner plan, saying "only a Balanced Budget Amendment will actually solve our debt problems."
And in the Senate, Tea Party-linked Utah Republican Mike Lee released a statement late Monday decrying both plans.
"Both plans represent typical Washington answers to the federal government's out-of-control spending problem," he said. "They add trillions to the national debt in the short-term while making hollow promises to cut spending in the long-term. Neither of the proposals fundamentally reform the way Washington spends money, require the federal government to balance its budget, or protect our triple-A credit rating."
Senate Majority leader Harry Reid of Nev., right, accompanied by Sen. Charles Schumer, D-NY, speaks to reporters on Capitol Hill in Washington, Monday, July 25, 2011, as they announce a new proposal to solve the debt limit crisis.
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AP Photo/J. Scott Applewhite
Schumer and Reid decried the GOP plan as a time-waster during their press conference, saying it had no chance to pass the Senate. Reid said the GOP is "being driven by the radical right-wing that is so in tune with the Tea Party," and suggested that rank-and-file House Republicans "want their leaders to ignore the American people." The Republican leadership, he argued, needs "to break away from those extremists who seem to be running the Republican party in Washington."
"Republicans are more interested in trying to embarrass the president than doing what's right for the country," added the Senate majority leader. (See video above.)
Anticipating Republican criticism that the $1 trillion in savings from winding down the wars is not a real spending cut, Schumer said that "if conducting wars adds to our debt, it's undeniable that winding down the wars delivers savings." He also pointed out that Republicans counted savings from winding down the wars in the Paul Ryan budget blueprint they passed in April.
"How can they say it's good when it's in their budget but it's not good when it's in our budget?" he asked.
At his appearance Thursday afternoon, Boehner said the Senate Democrats' plan is "full of gimicks" and doesn't make "any real changes in the spending structure of our government." He added that "it doesn't deal with the biggest drivers of our deficit and debt, and that would be entitlement programs."
The Democratic plan would not make cuts to Social Security, Medicare and Medicaid, unlike the so-called "grand bargain" proposed by the White House that would also have included revenue increases. It would save an additional $400 billion through interest savings, both from discretionary spending cuts and winding down the wars, and create a bipartisan committee to seek out future savings. It would also save $100 billion largely through reducing fraud and abuse in government programs, cutting $10-$15 billion in agriculture subsidies and saving $30 billion in Fannie Mae/Freddie Mac reforms.
Schumer acknowledged that the plan left difficult choices on revenue increases and entitlement reform to another time, but he said the "hard decision" to put forth the plan was necessary because of the August 2 deadline to increase the debt limit and the GOP unwillingness to compromise.
"In the interest of preventing a default we can have a fight on revenues later," Schumer said. Both he and Reid said Republicans would have no excuse if they oppose the plan, since it was made up solely of spending cuts they had previously supported.
"If they refuse this offer, it simply means they want a default, for any reason," Schumer said.
In a statement released immediately after the press conference, the White House said it backed the plan.
"Senator 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," said Press Secretary Jay Carney. "The ball is in their court."
The White House announced late Monday that Mr. Obama would address the nation Monday evening at 9 p.m. Eastern to discuss the effort to reach a deal.
The Obama administration has said that without congressional action, the U.S. will breach its limit on borrowing next Tuesday, August 2. That could cause the U.S. to default on its debt as well as a host of other negative outcomes, including the suspension of Social Security checks, military pay and other obligations, and could potentially cause global financial chaos.
Credit ratings agencies have warned that they are poised to withdraw the United States' triple-A credit rating without guarantees that it will not default, and they have also suggested that the credit rating is in danger without a significant deficit reduction effort. A lowered rating could potentially mean an increase in the cost of borrowing both for the U.S. government and for Americans seeking home and car loans and those seeking to pay off credit card debt.
They will go as far as say they are dems when in fact they are tea party republicans they tried that in Minnesota but got found out make sure you know who you are voting for. When it comes to dirty trick the republicans are experts at that so we have to stay one step ahead of them I hope the real candidates run as Independents they have there tea party we can be independent
by noloyalisti July 27, 2011 1:45 PM EDT Yes, in most fascist countries like America, where big business owns and runs the media, military and government, the elected politicians are really in office just as figurehead puppets.
you are so right the big business funds there campaign and then they go to them and ask what ya need I will legislate it for ya that is why we should look into Freedom Works and ALEC among others and don't forget the Supreme Court does America see what we are up against Republicans watch what you do we are watching you
I sincerely hope you are right Starburst. I was just at the Woodstock Museum on Bethel Woods NY and it reminded me of what millions of people can accomplish if they join together. Even though it took a long time they got rid of Nixon and Johnson and stopped Vietnam.
Of course the conservatives and Republicons were scared to death of this movement so they did everything they could since Reagan to put the billionaires in charge so they could take away our rights and freedoms.
I'am an Independent, and was undecided UNTIL the GOP held ALL Americans hostage, as they did in December 2010...
I was undecided, I'am an Independent , I have heard enough BS from the TeaBaggers, aka GOP Party...what a joke they are!
Putting ALL their so called principals before the majority of the American working class people. How do they sleep at night?
They know they would not be in office today without large amounts of $ from those corporate contributions.
Its as if in part, they are a political escort service for the rich in this country, but the $ they collect screws American workers with their policy decisions.
Reminds me of Cheny...
Put me down as voting for Obama in 2012, I'am done with the GOP for good!!!!!!!!
by noloyalisti July 27, 2011 12:27 PM EDT At some point soon, I believe we are going to have to Egypt this thing. That is why we must strongly support the labor unions because they still have the power to shut it down! xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I figure in this mind of mine we are not far off from taking to the streets,I believe all these people who have been so against Unions will soon say please help us. Watch Minnesota they are taking there State back slow but sure and Scott Walker will find out soon the damage he tried to do. I hope the country wakes up and takes this power the Tea party think they have and put a stop to there radical rhetoric once and for all sick of all this.
Yes, in most fascist countries like America, where big business owns and runs the media, military and government, the elected politicians are really in office just as figurehead puppets.
Get real Dems, you are trying to talk with a group of radical firm father figure conservatives. These are corrupted, bought and paid for Republicons who hate women, minorities, children, elderly and American soldiers.
Everything about the Republicons say that they hate America and want to continue the vast welfare and entitlement system for the rich (Top 2%). At the expense of the rest of us.
Nothing on this forum telling how the republicans withheld funds to the FAA, airlines are making millions every day, and it is costing American taxpayers 30 million a day,9000 workers laid off, construction all over the United States stopped. Air traffic controllers are on the job day and night to keep the planes flying is all,some without enough rest, so the tax paid to the government has stopped. Does any American doubt these wackos are there to destroy us and Obama at any cost.Protect the big guys is all they care about, you must have broken your oath of office several times by now for sure..American when you go and vote please know all about who you are voting for for goodness sake,or we could be a communist country sooner than you think,our rights are going away everyday.
At some point soon, I believe we are going to have to Egypt this thing. That is why we must strongly support the labor unions because they still have the power to shut it down!
Hey Harry/Obama, Republicans can read! Try to sneak a hidden Tax in the new plan. Shame on you, you liberal crooks. We already have your new tax called Obamacare and it is coming like a big wave of sewage.
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Yes, in most fascist countries like America, where big business owns and runs the media, military and government, the elected politicians are really in office just as figurehead puppets.
you are so right the big business funds there campaign and then they go to them and ask what ya need I will legislate it for ya that is why we should look into Freedom Works and ALEC among others and don't forget the Supreme Court does America see what we are up against Republicans watch what you do we are watching you
Of course the conservatives and Republicons were scared to death of this movement so they did everything they could since Reagan to put the billionaires in charge so they could take away our rights and freedoms.
I was undecided, I'am an Independent , I have heard enough BS from the TeaBaggers, aka GOP Party...what a joke they are!
Putting ALL their so called principals before the majority of the American working class people.
How do they sleep at night?
They know they would not be in office today without large amounts of $ from those corporate contributions.
Its as if in part, they are a political escort service for the rich in this country, but the $ they collect screws American workers with their policy decisions.
Reminds me of Cheny...
Put me down as voting for Obama in 2012, I'am done with the GOP for good!!!!!!!!
At some point soon, I believe we are going to have to Egypt this thing. That is why we must strongly support the labor unions because they still have the power to shut it down!
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I figure in this mind of mine we are not far off from taking to the streets,I believe all these people who have been so against Unions will soon say please help us. Watch Minnesota they are taking there State back slow but sure and Scott Walker will find out soon the damage he tried to do. I hope the country wakes up and takes this power the Tea party think they have and put a stop to there radical rhetoric once and for all sick of all this.
Everything about the Republicons say that they hate America and want to continue the vast welfare and entitlement system for the rich (Top 2%). At the expense of the rest of us.