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The Policy Racket


Reid sends signal he won’t back compromise bill based on budget cuts

Updated Thursday, July 21, 2011 | 2:15 p.m.

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John Boehner

The deal that the president and the House Speaker both say they didn’t make last night is getting an anticipatory smackdown from the Senate majority leader, who says he won’t consent to an in-the-works compromise that’s entirely predicated on cuts.

"I only know what you know about the agreement — the potential agreement, I've been told,” Sen. Harry Reid said Thursday afternoon. “A call came in from the White House during this meeting that there's no agreement, they're working toward an agreement. What I have to say is this: The president always talked about balance. That there had to be some fairness in this. That this can't be all cuts.

“There has to be a balance. There has to be some revenue in the cuts,” Reid continued. “My caucus agrees with that. I hope the president sticks with that. I'm confident he will."

Reid’s words were a warning to President Obama, who is apparently close to striking a $3 trillion deal with Speaker John Boehner: to raise the debt limit by that much, and off-set the hike exclusively with cuts; no revenues, according to a Democratic source familiar with the negotiations.

While no one said it explicitly, a cut of that magnitude without tax hikes would have to include cuts to at either Social Security, or Medicare and Medicaid, or both.

Obama and Boehner had been urging lawmakers to make changes to entitlement spending programs. But Reid was never on board with the idea, saying he’d only agree to discussing modest alterations to the program if it was part of a “grand bargain” of at least $4 trillion that included revenues as well as cuts.

Congressional leaders were meeting with President Obama daily last week to push for a compromise. But the pace of those meetings has slowed, and lawmakers have spiraled off in different directions.

While Obama, Boehner and House Majority Leader Eric Cantor have been negotiating in private, and members of the Gang of Six have been laying out alternate proposals, Reid has been working with Senate Republican Leader Mitch McConnell to draft a backup bill as the country is days away from default.

That bill, which would let the president raise the debt limit $2.5 trillion in two or three stages, provided he gives Congress pre-scheduled proposals to cut spending, and Congress doesn’t override the president’s veto of its pre-scheduled motions to protest them.

It could be up for a vote as soon as Friday — carried by the Sense of the Senate resolution Reid attempted to have lawmakers pass earlier this month, to declare millionaires and billionaires ought to do more to tackle the national deficit.

When the bill moves through the Senate, it won’t have taxes or cuts, at any income or funding level. It will be left to the House to add the $1 trillion to $2 trillion in cuts that are part of this deal — and then kick it back to the Senate to give a final thumbs-up.

The bill is drafted and ready to go. But the ball doesn’t get rolling until the weekend, because first the Senate has to dispense with the “Cut, Cap, and Balance” plan that Republicans in the House passed Wednesday, and Republicans in the Senate have been clamoring for.

It won’t pass because Reid thinks it stinks.

“This is as weak and senseless as anything that has ever come on this Senate floor,” Reid called the plan, which would direct Congress to pass a balanced budget amendment that caps spending at 18 percent of GDP — lower than every mainstream Republican budget proposal. “It’s an anathema to what our country’s all about ... some of the worst legislation in the history of this country,” he continued.

Republicans fundamentally disagree. But they don’t control the floor; Reid does. And he’s going to hold the vote that will end consideration of the balanced budget amendment Friday.

And dogged support for Cut, Cap, and Balance doesn’t seem to run all the way up the chain of the Republican Party either. While McConnell has supported the Republicans pushing for it and their rhetoric, he also originated the Reid-McConnell proposal, and believes reaching an agreement by Aug. 2 is a must.

But the Reid-McConnell plan isn’t expected to pass right away. According to Democratic sources, the leader is anticipating some senator will try to block the legislation, slowing things down, potentially until the very last minute.

The House will then have minimal time to clear the legislation.

They won’t, however, be able to do it at all without some significant Democratic support. Several House Republicans — especially those who affiliate with the Tea Party — have called the McConnell proposal, which is designed to protect Republicans from a vote to raise the debt limit, everything from “irresponsible” to “stupid," and are not likely to back the bill.

Nevada Sen. Dean Heller has said he finds the deal "unsettling."

On the Democrats’ side, the most progressive members aren’t a lock either. The plan wouldn’t touch Medicare and Social Security, but it would potentially give Republicans a campaigning chip to use against Obama and other Democrats, and wouldn’t require revenue hikes to offset the cuts: a parity they were looking for.

On Thursday, the president called Reid and House Democratic leader Nancy Pelosi to meet with him at the White House Thursday evening; presumably both the proposal the president is reportedly concluding with Boehner and the Reid-McConnell deal will be main topics of discussion.

But if Reid pushes his and McConnell’s plan through, it may be too late to avoid what Congressional leaders fear: a downgrading in the U.S.’s credit rating. Moody’s and the S&P have already slated the United States for an official credit rating review after Aug. 2. Both have said the U.S. presently has a 50-50 chance of being downgraded from its highest-possible ranking.

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  1. Enough with the gamesmanship, Congress! Put the American People before your party for a change.

    But everyone knows that won't happen, so ...

    Just like the TEA Party fringe has made a significant effort to control the Republicans, those of us in the solid middle can, and will, create a new party that represents us and not cast in concrete ideology.

  2. Now I know why I voted for Senator Reid. Finally. A voice of reason, and not one to do compromise to just do compromise. Especially when the other side of the aisle (Republicans) always act like Dracula upon spotting a crucifix at the very mention of the word "compromise."

    I really don't see the linkage between cutting Social Security, Medicare and Medicaid along with giving even more and more tax cuts to filthy rich is needed to be done in order to raise the debt ceiling. I don't see any linkage. All I see is the Republican Party in Congress, who are entrusted and empowered to do their job, is holding the entirety of America's economic fortune at stake.

    Not sure if anyone sees this, but there is every indication that shows that all this is too late already. Already we may have lost our triple A rating...slipping down to B+. And also, Wall Street is already throwing money at America failing. Because Wall Street is not patriotic. The colors of their flag is not red, white and blue. It's one solid color. Green. The color of money.

    Time to stock up on catfood, I guess.

    Lastly, the very idea that we are pulling out of one war slowly (Iraq), STILL continuing in another war (Afghanistan), and assisting NATO in a Libyan civil war...and the Bush tax cuts are still going on? We're in the middle of wars, nothing in revenue coming in to pay for them because the filthy rich need their precious tax sheer utter madness. No country in the world would ever do something like that!

    Anyways, if this debt ceiling isn't raised and the U.S. suffers catastrophically from it, the Republican Party will OWN it. They, and they alone, are at fault. They can point fingers all over and shout and howl all they want, but the American people know what is up with this whole debacle. A crisis they actually manufactured.

    I say President Obama should just go ahead and exercise the Constitution and get this done. Let people scream and howl, battalions of lawyers involved as well as regiments of judges and court hell with the consequences and whatever happens as a result of his decision. This is beyond politics now. This is about America. For the President to do that would be the most American thing ever seen done by any President ever. America is simply not a deadbeat nation...a nation that refuses to pay its debts. No President worth his grain of salt would stand by idly and allow that to happen to this great nation.

    Again, I detest the Republican Party for not placing any emphasis on America; only on their stupid party politics. They should be ashamed of this behavior. And I hope the American people take note of this come the 2012 elections.

  3. If you detest the GOP for not putting America first what the hell were you detesting for two years when Obama spent all his political capital on Obamacare and the Dodd/Frank bill. How many jobs has that saved Colin?

    Colin you despise those that work and achieve and accuse them of being "anti-American" when the essence of the American dream is the freedom to do just that, work and achieve. You rail against those that are successful and cry the howls of indignation because you weren't handed yours.

    Well Colin realize that your government buddies have sold you out, sold out your children and your grandchildren to a life of indentured servitude. And my best advice to you Colin is to start learning how to speak Chinese.

    Colin you could confiscate the entire wealth and earnings of the Forbes 400 and you wouldn't cover our budget deficit for ONE YEAR. So let's get off the "we can save this country if we just tax the rich some more" kick. We've gone WAY past that stage a long time ago. Wake up and smell the coffee dude.

  4. teamster,

    Was Obama more correct to oppose and vote against raising the debt limit when he was a member of the Senate or more correct to want the limit raised now that he is POTUS? Explain.

  5. The left are determined to drive America off a cliff; demanding more spending. Some wonder which came first, taxes or spending? Unlike the chicken and the egg, it's a no-brainer. Taxes are the mechanism to pay for spending. and to serve as a vehicle for class warfare by demanding 'fairness', which of course is Bunk. Half of our residents pay no taxes and the top pay the majority. Trying to slip one by us poor dumb hicks (according to them) by inferring that the top pay no taxes at all. They fail to mention their cherished GE, a big supporter of the left and those like Warren Buffett, who paid little or no taxes. Buffet gets a pass due to charity to their pet causes but that doesn't increase his taxes by $1.

    They are hypocrites as they could stroke a check for 'their fair share'. They don't. They have no intention of doing so. Wealthy Democrats could instruct their accountants to increase their liability and to not hide money overseas. They will always find ways of dodging taxes because they can hire the top tax lawyers and accounting firms.

    Using $250,000 for joint returns and $200,000 for singles is the test If they were honest, they would tell the truth that the majority of small businesses affected by this tax strategy are sole proprietorships and subchapter S corps which are essentially family owned businesses that file on their personal income tax. Ask small business owners in this bracket how much they has left after expenses and taxes. Very little with little to reinvest or grow the business. But it's those over that mark at fault. They call them millionaires and billionaires when most are far from it.

    The never ending spending is generational theft and the tax increases to fund it are also. Some try to hold spending to 20% of GDP and balance the budget, some taxe the air you breathe while spending every dime they can. The socialist view that private property is bad and redistribution while punishing those most productive is their core.

    Whose driving us towards the cliff? Who's doing the spending? Whose playing one group of Americans against another? Who you hear every day blaming others for the problems they create?

    A balanced budget amendment? It will never happen, the left won't allow it. They go stupid at the mere thought. Why? Because that would limit their ability to spend. When our economy collapses, high or hyperinflation hits and it takes a car load of dollars to buy milk, how important will the debt limit be? When that day comes, remember who insisted on more spending, more taxes and no restraint.

  6. teamster, if refusing to raise the debt ceiling then would stop the wars, then why wouldn't refusing to do so now stop them as well?

    And if you recall Pelosi was Speaker of the House, she could have easily blocked any further funding for the wars or a debt ceiling increase.

  7. Dale...look at the economic history of the US and you will see that spending came first, vast [for those days] borrowed sums from wealthy investors, the French, Germans and Austrians to finance the Revolutionary War. Some British investors also got in the game, selling British investment short.

  8. I hate to say this. I am going to say it anyway.

    Look me up on Google.

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