Throughout the long, exhausting effort to reach an agreement on raising the debt ceiling, one issue has deadlocked the two parties: taxes. Democrats demanded that a debt-reduction plan include some new tax revenues in order to mitigate the pain of spending cuts; Republicans insisted that the package could not include one cent of new tax revenue. Both sides dug in. In order for the debt ceiling to be raised before Ceilingmageddon (still haven't come up with a good name for this), someone had to relent. With about a week until the deadline, that someone is ... the Democrats. The Wall Street Journal reports:
Senate Democratic Majority Leader Harry Reid is working on a backup plan to increase the debt ceiling by $2.5 trillion and cut spending by the same amount in the event there is no further progress in talks between Democratic and Republican congressional leaders, a Senate Democratic aide said Sunday.
The plan would have no new tax increases, the aide said.
The outline of Reid's plan — debt-reduction matching the size of a debt-ceiling increase, with no new taxes — is exactly what the GOP has wanted this whole time. Granted, it's expected that $1 trillion in savings would come from winding down our presence in Iraq and Afghanistan over the next ten years, which was going to happen anyway. It's a gimmick, but one that was also part of the Paul Ryan budget plan that the House passed unanimously, so it would be hard for the GOP get upset about that (although we wouldn't put it past them).
In short, the GOP, unyielding even in the face of public opinion and the threat of economic disaster, has won. But have they won enough? Now that Republicans are set to receive everything they've demanded, Speaker of the House John Boehner is moving the goal posts and adding a new requirement: That the debt ceiling be raised once now and once again before the 2012 election, presumably so as to give the GOP another opportunity to blame Obama for the country's debt problem. Bloomberg reports:
House Speaker John Boehner’s office said he will unveil a plan today to prevent a default on the U.S. debt while cutting spending and denying President Barack Obama a “blank check” to borrow more money without trimming expenditures.
In a blog post on his website, Boehner’s staff wrote that his plan “is aimed at stopping President Obama’s indefensible quest for a debt-limit increase that would run past the next election without a process in place to ensure spending is being cut as the debt ceiling is being raised.”
The plan Boehner is proposing would provide an immediate debt-ceiling increase of about $1 trillion, accompanied by the same level of spending cuts, and charge a congressional committee with devising more debt savings before the president is granted additional borrowing authority.
Will Obama and the Democrats accede to the GOP's latest demand? If they do, will Boehner just think of another new requirement to tack on before August 2? Maybe he could have Obama walk around Washington wearing a cardboard sign that reads "The debt is all my fault. Vote for Obama if you love debt. And Hamas. I also love Hamas."
Debt-limit compromise elusive as separate strategies take shape in House, Senate [WP]
Reid Working on Backup Plan to Lift Ceiling, Cut Spending [WSJ]
Boehner to Offer Plan to Avert Default, Deny Obama ‘Blank Check’ [Bloomberg]