Nearing the August 2nd deadline that the President has suggested will very nearly be the end of the world (or at least, the global market) if officials don't come to an agreement on the debt ceiling, several proposals have been submitted to Congress for review. Here's a breakdown of the top contenders:
This seems to be Obama's favorite. It's simple, to the point, and vague. Step one is to make spending cuts and tax increases to yield a $500 billion reduction in the federal deficit. Which sounds fantastic, but the plan lacks specifics. Where will the cuts be made? How much will taxes be raised? Obviously, Congress needs to make spending cuts, but the debate over what to cut has been dragging on for months. (Years, really, but who's counting?) Step two is to impose spending caps on discretionary spending. Which portion of the discretionary spending they're referencing, no one knows. Step three promises to enact a law in the next six months that will lower the individual and corporate tax rates to 29 percent, as well as raise taxes overall by $3.4 trillion over the next 10 years. That would be quite a feat. What is interesting about this bill is that it doesn't even mention the debt limit; however, even President Obama is sure that the 'Gang of Six' intended the goal of this plan to ultimately be an increase in the debt limit. Bravo.
The McConnell 'Pass the Buck' Plan
This plan doesn't even require sarcasm to show its flaws. Senate Republican Leader Mitch McConnell of Kentucky thinks Congress should let President Obama request a debt ceiling increase with different spending cuts in three different sets of votes. Advantages? Nobody can get blamed for the outcome except President Obama, as the Congress would need a two-thirds majority vote to disapprove the request. Disadvantages? The complete power of this vote decision would fall on the President and there is a chance the outcome would be a debt ceiling increase with no spending cuts. Some Republicans are actually supporting this route because it means a lot of them could vote against the increase even though the increase would go through, and then they can sit back and tell the Democrats, "I told you so." Or, at least, that's their back-up plan if things go wrong. Real mature. (Okay, maybe a little sarcasm.)
The Cut, Cap, and Balance Act of 2011
Out of all the plans out there, this comes closest to a compromise among both Republicans and Democrats. Simply put, this bill would require substantial cuts in spending, an enforceable spending cap, and an amendment to the Constitution to include "a balanced budget component, a super-majority requirement to raise taxes, and a limit on spending as a percentage of GDP." The bill stipulates that if, and only if, the Balanced Budget Amendment is passed, a $2.4 trillion debt limit increase (which is what Obama has requested) can be considered in Congress. This bill also caters to Democrats by specifying that the cuts are only to be made to "non-veterans, non-Medicare, non-Social Security mandatory spending."
Harry Reid's plan also pulls from offers made by both Democrats and Republicans. All of the aspects of Reid's plan are not clear yet, but it does include $2.7 trillion in cuts that more than makes up for the $2.4 trillion debt increase. It includes a cut to healthcare somewhere around $335 billion, but it is speculated that those cuts will not affect Medicaid or Medicare. One interesting facet of the otherwise mysterious Reid plan is Reid's idea to auction off rights to the airwaves, providing another $15 billion in revenue. The FCC is thrilled about this idea, saying they've been pushing Congress to do this so that they could focus on meeting demands of new technology. One more step forward in government control invading the daily lives of Americans.
There is no doubt that the decision will come down to the very last minute. After all, this really isn't about the debt ceiling; it's about politics. The Democrats have their perspective, the Republicans have a different perspective, and this is the ultimate battle to see whose perspective is the right one. Or maybe our leaders should sign up for kindergarten in the fall to learn conflict resolution, how to share, and how to compromise.
recommend
Facebook
Twitter
bookmark 
print
Comments: 10
It would be awful to raise taxes on Americans right now. I realize that there are a lot of people who are not paying taxes, not to mention illegals who aren't paying taxes but are still reaping benefits, but like Kimberli said below that comes back to monitoring these social programs more closely. If only those who really needed these programs were using the programs, we wouldn't be spending anywhere near as much.
I have to say that with regard to taxes, I'm rather for eliminating some deductions for the top income earners. Especially if the deductions in question are not used by small businesses.
I completely agree that raising taxes on 'job creators' isn't a good idea. But raising taxes on those who make the most money and do not create jobs with that money isn't a bad idea. A lot of Wall Street fits that bill. CEOs and the like who don't use their personal income to create jobs and have spent the last decade figuring out ways to fleece good bank customers; they could use some added taxation.
It is true that we have a spending problem. It is also true that we have a revenue problem. Now the revenue problem isn't on the same scale as the spending problem, so it is indeed true that we need to make some dramatic cuts. But the revenue problem needs to be addressed also. And eliminating some deductions, flattening and even lowering the rates, and re-structuring capital gains to lower the burden on small business and still increase revenue by targeting corporations who move jobs overseas; I think those things could be done so as to improve the economy over the long term while also improving our nation's revenue situation.
Generally speaking, the illegals and poorest earners who are not paying taxes don't have much to contribute (if anything). Big businesses that don't pay taxes, on the other hand, I'm all for closing those loopholes.
From CBO:
Share of Individual Income Tax Liabilities by household income
1992, 2005
1st Quintile : 0.0, -2.9 (Negative, they actually receive income taxes)
2nd Quintile: 4.1, -0.9 (Negative again)
3rd Quintile: 10.7, 4.4
4th Quintile: 20.2, 13.1
5th Quintile: 64.9, 86.3
The bottom 40% of earners receive income taxes instead of paying them. They may not have much to contribute, but we could at least stop sending them income tax checks.
As far as the loopholes, I agree with you. But the definition of loophole can vary person to person. The "Gang of Six" loophole cuts include deductions for mortgage interest, charitable contributions, and retirement savings. I'll bet those aren't on the minds of most voters as loopholes to close.
Any plan will be heralded a HUGE VICTORY for both parties and of course for "The American People"...that we can all go back to sleep now because government has avoided the chaos once again.
Then as the American Populace settles down, Washington will get down to business with the likes of JP Morgan, BAC, GE, Boeing, et al and decide what "they" need or want and write the legislation to appease the "Big Boys". Any loopholes closed, any corporate tax increases will NEED to get teh stamp of approval from the "Mighty Ones" (Big Business and the FED).
Theater is a term that constantly comes to mind here for me. It's the prelude to the upcoming "election cycle"...more to come!!!!
Respectfully
Reid Plan's estimated cuts are overstated. Also, the baseline is at question because $1 trillion of the cuts come from Iraq and Afghan war savings.
I did see that $1 trillion in cuts comes from war savings. All of the plans have included that facet to some effect. While it isn't the legitimate cuts we need, at least it's a start. We have a long ways to go before we're where we need to be, but at least the conversation is finally happening. It's unfortunate that this conversation may already be too late.