Over the past several weeks, negotiations on a deal that would raise the federal debt ceiling while also making deep cuts in spending, and possible increases in taxes, to close the $14 trillion budget deficit could be described as acrimonious, hostile and a times downright nasty. Perhaps that’s why a slight ray of hope is so welcome for the combatants on Capitol Hill, and that ray of hopeful sunshine did indeed materialize today in the form of an older compromise plan. The “Gang of 6” U.S. Senators, a bipartisan group that had been meeting informally for several months, produced the broad blueprint for a plan that would cut $3.7 trillion from the deficit over 10 years. It had been dismissed as politically untenable but it has new life, and even President Obama is into the idea, calling it “broadly consistent” with his own approach to the debt ceiling crisis. Several dozen Senators are now into the idea of a package of spending cuts and tax code reforms, Republican Sen. Kelly Ayotte from Arkansas describing the meeting on the plan as “the vibe in the room was very positive.”
The devil will be in the details, as there are a lot of them to work out to get to $3.7 trillion in deficit reductions. The plan will impose immediate spending cuts and caps that would reduce the deficit by $500 billion over 10 years; make changes to Social Security designed to keep the program solvent for 75 years; director congressional committees to find specific levels of deficit reduction within their areas of jurisdiction. There is also the very big question of whether this kind of package can pass the House, where Tea Party-inspired Republicans are still threatening to vote “no” on any increase in the debt ceiling. How long can the “positive vibes” last in Congress?
Rudy Penner, Institute Fellow at the Urban Institute; former director of the Congressional Budget Office under the Reagan administration