Here's the portion of the President's speech tonight that really counted:
Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn't solve the problem.
First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there's no point in putting the economy at risk by kicking the can further down the road.
But there's an even greater danger to this approach. Based on what we've seen these past few weeks, we know what to expect six months from now. The House will once again refuse to prevent default unless the rest of us accept their cuts-only approach. Again, they will refuse to ask the wealthiest Americans to give up their tax cuts or deductions. Again, they will demand harsh cuts to programs like Medicare. And once again, the economy will be held captive unless they get their way.
That is no way to run the greatest country on Earth. It is a dangerous game we've never played before, and we can't afford to play it now. Not when the jobs and livelihoods of so many families are at stake. We can't allow the American people to become collateral damage to Washington's political warfare.
Congress now has one week left to act, and there are still paths forward. The Senate has introduced a plan to avoid default, which makes a down payment on deficit reduction and ensures that we don't have to go through this again in six months.
I think that's a much better path, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. Either way, I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress -- a compromise I can sign. And I am confident we can reach this compromise. Despite our disagreements, Republican leaders and I have found common ground before. And I believe that enough members of both parties will ultimately put politics aside and help us make progress.
Here is the portion of the Speaker's speech tonight that mattered:
You see, there is no stalemate in Congress. The House has passed a bill to raise the debt limit with bipartisan support. And this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill -- one that was developed with the support of the bipartisan leadership of the U.S. Senate.
Obviously, I expect that bill can and will pass the Senate, and be sent to the President for his signature. If the President signs it, the 'crisis' atmosphere he has created will simply disappear. The debt limit will be raised. Spending will be cut by more than one trillion dollars, and a serious, bipartisan committee of the Congress will begin the hard but necessary work of dealing with the tough challenges our nation faces.
The individuals doing this work will not be outsiders, but elected representatives of the people, doing the job they were elected to do as outlined in the Constitution. Those decisions should be made based on how they will affect people who are struggling to get a job, not how they affect some politician's chances of getting re-elected.
Here is John Boehner's plan as posted on Ezra Klein's blog earlier today:
Two-Step Approach to Hold President Obama Accountable
Republicans insisted that if the president wants his debt ceiling increase, the American people will require serious spending cuts and reforms. This two-step approach meets House Republicans’ criteria by (1) making spending cuts that are larger than any debt ceiling increase; (2) implementing spending caps to restrain future spending; and (3) advancing the cause of the Balanced Budget Amendment – without tax hikes on families and job creators. Although this is not the House-passed “Cut, Cap, and Balance,” it is a package that reflects the principles of Cut, Cap, and Balance. Here is more information on the plan:
• Cuts that exceed the debt hike. The framework would cut and cap discretionary spending immediately, saving $1.2 trillion over 10 years (subject to CBO confirmation), and raise the debt ceiling by less – up to $1 trillion.
• Caps to control future spending. The framework imposes spending caps that would establish clear limits on future spending and serve as a barrier against government expansion while the economy grows. Failure to remain below these caps will trigger automatic across-the-board cuts (otherwise known as sequestration).
• Balanced Budget Amendment. The framework advances the cause of the Balanced Budget Amendment by requiring the House and Senate to vote on the measure after Oct. 1, but before the end of the year, allowing the American people time to build sufficient support for this popular reform.
• Entitlement Reforms & Savings. The framework creates a Joint Committee of Congress that is required to report legislation that would produce a proposal to reduce the deficit by at least $1.8 trillion over 10 years. Each chamber would consider the proposal of the joint committee on an up-or-down basis without any amendments. If the proposal is enacted, then the president would be authorized to request a debt limit increase of $1.6 trillion.
• No Tax Hikes. The framework included no tax hikes, a key principle that Republicans have been fighting for since Day 1.
Now, take a look at Harry Reid's proposal, also reported on Ezra's blog, which the President has approved of:
Details of the $2.7 Trillion Senate Democratic Package.
— $1.2 Trillion in Discretionary Spending Cuts. The $1.2 trillion in discretionary spending cuts include both defense and non-defense spending. Before Speaker Boehner broke off talks with the White House on Friday, he had already agreed to $1.2 trillion in discretionary spending cuts.
— $100 Billion in Mandatory Savings. The proposal includes $100 billion in mandatory savings that were negotiated by Democrats and Republicans participating in the negotiations led by Vice President Biden. These savings will not impact Medicare, Medicaid, or Social Security benefits in any way. The mandatory savings will include:
o $40 billion in Program Integrity Savings. The proposal saves $40 billion by reducing fraud and abuse in mandatory programs. This includes: Continuing Disability Reviews and SSI redeterminations, Internal Revenue Service tax enforcement, health care fraud and abuse control, and Unemployment Insurance improper payment reviews.
o $30 Billion In Fannie Mae/Freddie Mac Reforms.
o $15 Billion In Spectrum Sales
o $10 -15 Billion In Agricultural Reforms
o Higher Education Program Reforms Whose Savings Go To Sustain The Pell Grant Program
— $1 Trillion in Savings From Winding Down the Wars in Iraq and Afghanistan. Winding down the wars in Iraq and Afghanistan will save $1 trillion. Paul Ryan’s budget also included this savings in its deficit reduction calculation, which was supported by 235 House Republicans and 40 Senate Republicans.
— $400 Billion in Interest Savings. The package includes $400 billion in interest savings, $220 billion from the discretionary spending cuts and $180 billion from winding down the wars in Iraq and Afghanistan. Both the Ryan budget and the House Cut, Cap and Balance plan similarly included interest savings in their total calculation.
— Establishes Joint Congressional Committee to Find Future Savings. In addition to $2.7 trillion in concrete savings, the Senate package will establish a joint, bipartisan committee, made up of 12 members, to present options for future deficit reduction. The committee’s recommendations will be guaranteed an up-or-down Senate vote, without amendments, by the end of 2011.
Here is Ezra's analysis of the similarities and differences between the two plans:
Both plans call for $1.2 trillion in cuts to discretionary spending. Both plans envision the formation of a bipartisan “Supercommittee” that will try to find consensus on a larger deficit-reduction package that, if it wins a majority on the Supercommittee, will be immune to amendments and filibusters and be fast-tracked for an up-or-down vote in the House and the Senate.
Reid’s plan includes $100 billion in savings from so-called “mandatory spending” like Fannie Mae and agricultural subsidies, $1 trillion in savings from winding down the wars, and $400 billion in reduced interest payments from cutting more than $200 billion in spending. Boehner’s plan doesn’t specifically include any of that, but it’s fair to expect that his bipartisan committee would end up recommending many of the same mandatory savings, that the wars will wind down whether Boehner mentions them or not, and if all that happens, his interest savings will be similar. So the two plans are roughly equivalent in their immediate savings.
But that’s about as far as the agreement goes. Reid would use his $2.7 trillion in named savings to raise the debt ceiling through to 2013. Boehner underplays his savings precisely so he doesn’t have to raise the debt ceiling through to 2013. He doesn’t mention the war spending or interest savings, for instance, which Republicans counted in the Ryan budget, and which were part of Boehner’s negotiations with the White House. That allows Boehner to say he’s saving $1.2 trillion rather than $2.4 trillion, and thus gives him reason to only raise the debt ceiling by $1 trillion and demand that Congress go through another debt-ceiling debate next year. But that’s a choice he’s making, for reasons that will come clear in a moment.
Boehner’s plan also forces a vote on a balanced-budget amendment to the Constitution by October 1st and set down strict caps to control spending in the future. If the caps are exceeded then the law would trigger automatic, across-the-board spending cuts. And that’s all before we get to 2012.
Once we get to 2012, either the new congressional committee reports out a plan that Congress approves or the debt ceiling isn’t raised. That is to say, either we strike the sort of grand bargain that proved impossible this year during an election year, or we’re back to threatening the full faith and credit of the country — and this time, we’ll be doing it in the most politically polarized of all possible worlds.
Call me crazy, but it looks to me like Boehner's plan is a set up to get us to the same spending cuts Reid is proposing and the President has already approved of. The supercommittee will be 6 Democrats and 6 Repbulicans (and will likely include people who've already agreed to the spending cuts oulined in the Reid plan). Republicans will get budget caps and a vote on the Balanced Budget Amendment (notice how it is decoupled in the Boehner plan so that Republicans can all vote for it without fear of doing any harm.
I'm betting the Boehner Plan was the agreement that was reached before Boehner walked out on the President. Boehner gave it a snappy little title that is a big "fuck you" to the President. The President went out of his way to reject it on National TV in prime time. Boehner got up in the President's face and said "oh, you'll take this Mr. President, but you ain't gonna like it." Now, maybe, just maybe, this thing can get through the House of Representatives.