LAS VEGAS -- A deal congressional leaders have worked out with President Barack Obama would allow Republicans two "resolutions of disapproval" and the chance to vote on a balanced budget amendment, but would protect Social Security, Medicare and other welfare programs from unilateral cuts, according to a Democratic source.
Here's the basic outlines of the agreement, which will likely come up for a vote Monday, just one day before an Aug. 2 deadline after which the government will no longer have enough money to pay all of its bills. (Both the Senate and the House must pass the bill by the deadline.)
- An immediate $400 billion increase in the debt ceiling by Tuesday.
- Another $500 billion increase in the ceiling by September, subject to a "resolution of disapproval" that can (and will) be vetoed by the president.
- In exchange for those increases, $1.2 trillion in cuts over 10 years. (It was not immediately clear Sunday afternoon whether that figured included expected savings from ending the wars in Iraq and Afghanistan.)
The bill also includes a provision for a 12-member, bipartisan committee of lawmakers from the House and Senate whose job it will be to find an additional $1.5 billion in deficit savings, either from cuts to future budgets, increased tax revenues or both. "Everything is on the table," the source said, including changes to entitlement programs such as Social Security and Medicare.
That committee will have until the end of the year to work, and its list of cuts is guaranteed to come to the floor of the House and Senate without amendment for an up-or-down vote. It will be accompanied by a dollar-for-dollar increase in the debt ceiling, for a grand total of $2.7 trillion by year's end. The bipartisan list of cuts does not have to pass for the debt ceiling to be raised, however.
However, if the committee fails to reach consensus on a list of cuts, then automatic cuts of $1.5 trillion will be imposed, thusly:
- 50 percent from the Defense Department.
- 50 percent from non-defense discretionary funds.
- However, the automatic cuts may not include Social Security, Medicare, Medicaid, veteran's benefits or other welfare programs such as food stamps, Aid to Families with Dependent Children, the Women's, Infants and Children's (WIC) program, etc.
Not only that, but the introduction of a balanced budget amendment is guaranteed by year's end. Details of that amendment (for example, whether it would include a prohibition on balancing the budget without taxes) weren't entirely clear. But because the amendment requires a two-thirds vote in the House and Senate, it's not likely to pass. (Even if it did, it would require ratification by three-fourths of the states to become part of the constitution.)
There are no provisions in the bill to immediately end subsidies to corporations (such as oil companies), close tax loopholes or raise taxes by allowing the George W. Bush tax cuts for well-off individuals and families to expire — but those things would be within the purview of the bipartisan committee. Liberals have objected to that facet of debt-ceiling negotiations in the past.
Politically, each side gets something in the bill. Democrats get to finish the debt-ceiling work in 2011, and ensure the debate won't come up in the 2012 election cycle. They also get to protect entitlement and welfare programs from cuts, except for those that may be proposed by the bipartisan committee, to which Democrats would have to agree.
For Republicans, there are the resolutions of disapproval, which allow them to vote against the debt ceiling increase and place blame for it on Obama. Also, there are significant cuts to the deficit, $2.7 trillion over 10 years. And while the balanced budget amendment vote might be symbolic, it will also be useful as a political wedge in the 2012 cycle.
However, the plan still has to pass. A Senate vote on Monday means the House must vote later that day, or on Tuesday, a deadline day for the economy. If tea party Republicans object — as they did with an initial version of a bill brought by Republican Speaker John Boehner — the entire bill may collapse, and the government will have to start prioritizing which bills to pay. The consequences of that are uncertain, but higher interest rates, a downgrading of U.S. creditworthiness and other dire effects are among the predictions.
Follow the I-Team's @SteveSebelius on @Twitter.
