GOP debt plan: Balanced, or bad policy?

A July 15, 2011 file photo of Speaker of the House John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) during a news conference at the U.S. Capitol in Washington, D.C.
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House Majority Leader Eric Cantor (R-VA) listens to Speaker of the House John Boehner (R-OH) during a news conference
House Majority Leader Eric Cantor (R-VA) listens to Speaker of the House John Boehner (R-OH) during a news conference after a House GOP caucus meeting at the U.S. Capitol, July 15, 2011 in Washington, DC.
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The House of Representatives is considering its own plan to raise the debt ceiling today: the "cut, cap and balance" plan. Republicans who support it say it's needed policy to right the country's financial situation. Democrats say it would dismantle the government's safety net and change the nature of the country. So what is it?

Their plan, which would cut $111 billion in federal spending this year, would also set mandatory caps for federal spending as a percentage of the nation's Gross Domestic Product, or GDP. Those caps would start at 22.5 percent and go down to 19.9 percent by the end of the decade and stay there for the foreseeable future. The plan would also require a balanced budget amendment be passed by the Congress and sent to the states for ratification. In other words, in order for Congress to raise the debt ceiling, there must be a constitutional amendment to require a balanced budget.

Republicans are pushing "cut, cap and balance" as the only viable approach to raise the nation's debt ceiling, which the Obama administration says must be done by August 2nd, and to set the country on a path of long-term fiscal viability.

"The president has said now, for once, that he wants a balanced approach. Well, guess what? In cut, cap and balance he does get a balanced approach," House Speaker John Boehner said this morning. "He gets his increase in the debt limit of $2.4 trillion. What we get are real cuts in spending and real reforms in place that'll make sure this problem never, ever happens again."

"Cut, cap and balance makes sure that the government stops spending, and it makes sure that we begin to treat taxpayer dollars as if they are just that, dollars belonging to the people, and we need to deal with them more responsibly," said Eric Cantor, the Republican Majority Leader in the House.

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As you would imagine, the Democrats have a different view of the proposal.

"You know, this is a measure to designed to duck, dodge and dismantle -- duck responsibility, dodge obligations, and dismantle, eventually, if enshrined into law, which it will not be -- but it would essentially require the dismantlement of our social safety nets, Social Security, Medicare and Medicaid," said White House Spokesman Jay Carney yesterday.

When the idea was floated last week, President Obama said he expected the House to take some votes that were "political statements." He also said the amendment was unnecessary. Later, the White House issued a statement saying the president would veto the bill if it were passed.

"We don't need a constitutional amendment to do our jobs. The Constitution already tells us to do our jobs and to make sure that the government is living within its means and making responsible choices," he said. "We simply need to make these tough choices and be willing to take on our bases."

The cut, cap and balance legislation comes from a pledge designed by a coalition of conservative interest groups, including the Club for Growth, the Christian Coalition, Americans for Prosperity, Taking our Country Back, and a wide variety of Tea Party organizations. The website for the pledge boasts it has 39 Senators and 115 House members as co-sponsors of the act, as well as five governors and nine presidential candidates as pledge signers. Yesterday, Congresswoman and presidential candidate Michele Bachmann signed the pledge.

"The principles found in this Pledge are a historic step in the right direction toward the fundamental restructuring we need in the way Washington spends taxpayer dollars," Bachmann said.

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Among issues that the detractors of this plan have, is that they say it would cut Medicare and other entitlement spending even more than the Housed-passed budget penned by GOP Rep. Paul Ryan, which would change Medicare to a "premium support" plan. Under the Ryan plan, the government would give insurers a flat fee for service and would no longer guarantee payment for service, as the current Medicare plan does.

Cut, cap and balance "institutes the kind of across-the-board cuts by calling -- you know, it's very cleverly designed so that they can claim this isn't the case because it's very vague, but it requires the passage of a balanced budget amendment, all of which under consideration in Congress right now would require even more draconian cuts, cuts that are even more draconian than the ones that were in the Ryan budget," said Carney.

In background information released by House Republicans, they say that's not so. They provided a quick question-and-answer about the plan. "Does the legislation make any changes to Social Security or Medicare? No," it says.

But Democrats say that with an aging population, setting caps on government spending would of course hurt Medicare and Social Security, as entitlements are the biggest long-term drivers of national debt.

"Evidently they didn't feel that passing legislation that balances the budget on the backs of seniors while giving tax breaks to millionaires, big oil companies and private jet owners screwed seniors enough, so they decided to try and ram it into the Constitution itself," Eddie Vale, the communications director of a pro-health care reform organization, Protect Your Care, said in a statement. "It's a sad testament to how extreme this position is that just two weeks after July 4 they're attempting to alter our nation's founding document to take away Medicare and Medicaid from seniors."

Additionally, some fear this version of the balanced budget amendment does not allow for government spending in an emergency -- that enforcing strict caps would prevent the federal government from responding to a natural disaster or terrorist attack. Others say it is something that future congresses could work around or ignore. Proponents, though, say now is the time to act and to set the framework for a responsible fiscal plan that future congresses would have to follow.

"Those who support 'cut, cap and balance' that the House takes up today will be voting for getting our fiscal house in order and against an unsustainable status quo," said Senate Minority Leader Mitch McConnell. "Cut cap and balance is the kind of tough legislation that Washington needs and that Americans want, and Republicans will spend the week trying to convince Democrats to join us in supporting it. Every single Republican in the Senate supports a balanced budget amendment."

Senate Democrats have made it clear that the bill has no chance of passing the Senate, and today Senate Majority Leader Harry Reid continued to frame the "cut, cap and balance" plan as bad policy. "When I talk about slashing benefits in half, I'm talking about Social Security. I'm talking about Medicare, Medicaid, veterans' benefits and every other government service no matter how essential," he said. "Yet it makes it almost impossible to end even the most wasteful tax breaks and loopholes already in place."

Politically speaking, the plan could be a first step to seeing a resolution to the debt standoff.

While some, like Democratic Sen/ Chuck Schumer call it "an exercise in political theater," the plan would at the very least allow the conservative House Republicans to cast a vote for aggressive spending cuts and a balanced budget. Once the bill fails in the Senate, the door to a bipartisan approach would be slightly more attractive, and give many in the House GOP the cover they would need to vote for a compromise bill, like the one floated by McConnell, that would give the president the authority to raise the debt ceiling but with less significant spending cuts than the House bill.

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    Robert Hendin is senior producer for "Face the Nation" and a CBS News senior political producer.