Boehner and Reid Plans Moving Forward

The state of play in the debt negotiations has been an ever-evolving spectacle over the last several weeks. First the Biden group negotiations, then talks between Congressional leaders and the White House, then negotiations between the President and Speaker of the House John Boehner, then the Reid-McConnell proposal, then the Gang of Six proposal, then additional negotiations between the President and the Speaker--just to mention a few. Well, there's been another twist in all this ever since talks broke down again on Friday evening.

Speaker Boehner and Senate Majority Leader Harry Reid are now advancing proposals on their own on how to raise the debt ceiling and begin tackling future debt. First, some details on the specifics of what each plan calls for:

Boehner's Proposal

  • $1.2 trillion in savings from 10-year discretionary caps
  • $1 trillion increase in the debt ceiling now
  • Requirement that Congress votes on a balanced budget amendment after Oct. 1 but before the end of the year
  • Create a 12-member commitee of lawmakers to report legislation by Nov. 23 on how to reduce deficits by another $1.8 trillion
  • If the $1.8 trillion in savings is enacted, authorize the President to increase the debt ceiling by another $1.6 trillion

Reid's Proposal

  • Raises debt ceiling through 2012 now
  • $1.2 trillion in savings from 10-year discretionary caps
  • $100 billion in other mandatory savings (excluding Medicare, Medicaid, and Social Security)
    • $40 billion from waste, fraud, and abuse
    • $30 billion from Fannie Mae/Freddie Mac reforms
    • $15 billion in spectrum sales
    • $10-$15 billion in agricultural reforms
    • Higher education reforms to strengthen Pell Grants
  • $1 trillion in savings from winding down wars in Iraq and Afghanistan
  • $400 billion from interest savings
  • Establish 12-member committee of lawmakers to find additional savings

CRFB is happy to see both plans rely on upfront savings in a down payment on future debt reduction, as well as kicking off a special process to identify additional deficit reduction. These approaches correctly recognize the need to raise the debt ceiling as soon as possible, but also that the type of structural reforms that will be necessary to stabilize and reduce our debt take time and that forcing lawmakers to continue working on bipartisan solutions can keep the ball moving forward.

These proposals aren't perfect, though. But they're much much better than the status quo and could provide a framework for a responsible path forward. As the process unfolds in the coming days lawmakers should push for the largest possible down payment without resorting to phony savings and work to ensure that there is a credible process for achieving additional savings with all parts of the budget on the table and an enforcement mechanisms to ensure the savings materialize.

Lawmakers have a real opportunity here to begin tackling our fiscal challenges. Let's hope they take it.