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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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