Will Congress Raise the Debt Ceiling?
The political war wages on as Congress and the president try to reach an agreement on raising the debt ceiling before the August 2 deadline. Negotiations between President Obama and House Speaker John Boehner, R-OH, ended without reaching a major deal, so the speaker and Senate Majority Leader Harry Reid, D-NV, plan to bring their own plans up for a vote.
The House will vote on a plan by Boehner that would raise the debt ceiling in two increments — the debt ceiling will be raised until February 2012 and spending will be cut by $1.2 trillion over ten years. The president would then need to seek congressional approval to raise the debt ceiling again in February. However, the Congressional Budget Office scored Boehner’s proposal and concluded that it would save $150 billion less than estimated, forcing the speaker to go back to the drawing board to find additional savings. The plan’s proposed cuts will most likely come from discretionary spending, including programs like education, medical research and transportation. As part of the package, the House will vote on a balanced budget amendment that will need to be ratified by the states. It also creates a 12 member bipartisan commission that would be required to make $1.8 trillion in additional cuts over ten years. Congress would need to vote on an additional spending proposal by Nov. 23, 2011, with an up or down vote. As of this writing, it is uncertain whether the plan will pass the House since most Democrats and many conservative Republicans in the House oppose it. The Republican leadership is frantically pushing this bill in hopes of passing it and forcing the Senate to act.
However, Sen. Reid has stated that the House plan is “dead on arrival” in the Senate and has his own proposal to raise the debt ceiling through the end of 2012. Sen. Reid’s plan would cut $2.2 trillion over ten years, which would come from discretionary spending, and $100 billion from mandatory spending. Sen. Reid’s bill would also create a 12 member commission that would be required to come up with savings to be approved by Congress.
This process is extremely fluid as both sides try to secure the votes to pass these plans. The president has indicated that he will veto the House proposal since it is a short term fix, but House Republicans want to call his bluff. Both sides are playing an extremely high stakes game that could have serious ramifications if a deal is not complete by August 2.
We will continue to monitor this critical issue that will inevitably have an impact on funding for Medicare, physician reimbursements and medical research. Look for more updates in AGA’s eDigest and on the AGA Washington Insider.