Debt-ceiling plans face CBO fire: Does either cut as much as promised?
Added to the political question of whether either one of the competing debt-limit plans can pass Congress is a practical question from the nonpartisan CBO: How much will they cut the deficit?
Either one of the competing plans from Congress's top two leaders could help resolve a potential US debt crisis. But now the question is if either one can overcome skepticism about whether it can pass and whether it will work.Skip to next paragraph
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One new hurdle comes from official government bean counters, who say reductions in future deficits won't be as big as advertised.
The nonpartisan Congressional Budget Office (CBO) said Wednesday that a plan from Senate majority leader Harry Reid (D) would cut federal deficits by about $2.2 trillion over 10 years – whereas Senator Reid earlier in the week had touted $2.7 trillion in savings.
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A day earlier, the CBO said a rival plan pushed by House Speaker John Boehner (R) would reduce deficits by $850 billion over the next decade, compared with Mr. Boehner's initial announcement that the plan specifies $1.2 trillion in budget savings over that time.
The news helped push Boehner back to his drawing board to revise his plan in a bid to gather needed support from his own party.
Some Republicans are rebuffing Boehner's plan, arguing that neither the House speaker nor Reid is cutting federal spending enough to restore fiscal health. On the other side, many Democrats want to reduce future deficits partly through increased tax revenues – a goal that Boehner rejects and that Reid has abandoned as impractical.
In many ways, the two plans are similar, but one key difference has opened another major rift within Congress. Republicans are ready to embrace Boehner's idea of addressing the debt problem in a two-step process, while Democrats want to vote on the issue only once before the 2012 elections, as Reid's plan calls for.
Despite all the disagreement, and the CBO's scrutiny, pressure is rising for both sides to find common ground and bring the issue to a conclusion. The US Treasury has warned that unless Congress votes to raise the current cap on federal borrowing by Aug. 2 (a vote lawmakers are linking to the deficit-cutting plans), the government will be unable to pay all its bills.
A default on US Treasury debt would be possible, and the downgrading of America's credit score all but assured, with negative consequences for interest rates and the economy.
In a closed-door meeting Wednesday, Boehner lobbied fellow Republican lawmakers in the House to support his plan.