Why House conservatives are offering fresh plan on federal debt
Reeling from the reaction to Rep. Paul Ryan's proposal to reform Medicare, an influential group of House Republicans offers an alternative plan to lock in spending and rein in the federal debt.
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A new proposal forwarded by the House's influential Republican Study Committee (RSC) Monday makes no changes to entitlements like Medicare to balance the budget. Instead, it seeks to lock in total spending at certain levels through immediate cuts, followed by longer term spending caps and a balanced budget amendment to the Constitution.
The proposal shows the urgency motivating many Republicans, who say America is heading toward a federal debt crisis of Greek proportions. With Democrats fearful that the House Republicans will refuse to raise the federal debt limit by Aug. 2 without major spending reforms, conservatives sense a rare moment of opportunity, and the RSC's plan is a fresh attempt to seize it.
In their letter to Speaker John Boehner (R) of Ohio and majority leader Eric Cantor (R) of Virginia, the 103 members of the RSC cast the federal debt crisis in stark terms. “The Democrats have given up, saying that the only answer to excessive borrowing is more borrowing,” they wrote.
At current rates of spending, the interest paid on the national debt will triple over the next decade, consuming all tax revenues by the middle of this century, they said. Unless spending is significantly cut, “the government will in essence default on its debt by ‘picking the pocket of savers,’ ” they added, quoting William Gross, cofounder of PIMCO, an investment management company that last month sold off all of its US government debt holdings.
The RSC plan would cut spending for 2012 by $380 billion and establish enforceable spending caps that would limit total federal spending to 18 percent of gross domestic product. The balanced budget amendment would lock in the curbs with constitutional authority.