Democrats’ Latest Debt Ceiling Offer: No Tax Hikes

Senate majority Leader Harry Reid is now willing to make a debt ceiling deal without tax increases just to avoid another debt ceiling deadline before the election. 

The final week before the debt ceiling deadline begins with two new debt ceiling plans.  These plans are not yet available on line so all we know about them is what their authors say about them.

House Speaker John Boehner presented his latest debt ceiling proposal, a two step plan

  • Step I would raise the debt ceiling by about $1 trillion and cut discretionary spending by $1.2 trillion over 10 years.  That would be enough to support current spending until March.
  • Step II would set up a committee of 12 Senators and Congressmen, 3 members of each party from the house and from the Senate, to identify $1.8 trillion more in savings, again over ten years.  The debt ceiling would go up again, enough to support spending until the end of 2012, if Congress voted to adopt the additional savings savings.
  • Both House and Senate would hold votes on a Constitutional Amendment requiring a balanced budget.
  • No tax increases

Senate Majority Leader Harry Reid introduced his separate plan that would:

  • Immediately raise the debt limit by $2.7 trillion, enough to fund the government beyond the 2012 Presidential election.
  • Cut spending by $2.7 trillion over ten years
  • Set up a committee to recommend more cuts
  • No tax increases, a major concession from the Reid/Obama camp.

The most politically significant difference between the competing plans is that Boehner’s includes another debt ceiling deadline in March, requiring another public debate in the midst of the Presidential campaign.  President Obama does not want that to happen.  In fact he said in a news conference last week:

The only bottom line I have is that we have to extend this debt ceiling through the next election, into 2013.

In an earlier press conference he said:

…if the only thing we’re talking about over the next year, two years, five years, is debt and deficits, then it’s very hard to start talking about how do we make investments in community colleges…about making investments in our kids… investments in our infrastructure… investments in basic research…

Obama claims 80% of us are on his side, in favor of tax increases which he calls “balance.” But if he really believed that, he would welcome another episode of debt-ceiling theater.  It appears the Democrats’ internal polling predicts voter backlash against the President and their party if there is another stand-off, with principled Republicans resisting their demands for tax hikes.

Obama wants to be able to campaign on generous promises of “investments” in more government.  He knows we won’t appreciate his benevolence if the daily headlines are about the titanic debt he’s accumulating for us, our children, and our grandchildren to pay off.

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