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Wednesday, July 27, 2011

14th Amendment Remedy?

There are only six days to go until the United States government (voluntarily) defaults on its debt obligations. As this deadline grows nearer it seems that a bi-partisan solution to solve this self induced crisis is no closer than it was a week or two ago. Washington D.C. still finds itself at an impasse despite weeks of budget talks led by Vice President Biden, negotiations between Speaker of the House John Boehner (R-OH) and President Obama, the McConnell Plan, the Gang of Six bipartisan Senate plan, the House Republican Cut, Cap, and Balance Bill, the new Boehner plan, and the Reid plan.

Even with all of the different plans to not voluntarily destroy the economy floating around we still have no concrete solution. So why aren't more of us asking ourselves why we're even putting ourselves this? Why now, for the first time in U.S. history, are budget negotiations being tied to the debt ceiling? The Congress should just do an up or down vote on raising the debt ceiling with no attached provisions (as it has done about 40 times since I was born in 1982). This is the best option at this point since it does not seem likely that any of the proposed plans will pass at this point.  Let us briefly re-visit all of the masterful plans that have been crafted to avoid the self induced crisis.

Option one: The Biden talks that ultimately led to the deal that President Obama and Speaker Boehner were reportedly close to reaching is obviously a "no-go" at this point. Unfortunately, it looks like we are well beyond the point where any Republicans (House or Senate) will endorse a plan that the White House has a hand in crafting. This looked like a viable option for a number of weeks until it became clear that too many Republicans would not support the plan, causing Boehner to walk away. It revealed some cracks in the republican House leadership that made this plan too toxic for house republicans to support. This is more unfortunate for Republicans than the President because they were being offered the chance to make the biggest cuts to entitlements ever. A deal that the Republicans of just a decade ago could have only dreamed about. This plan was also not very amiable to Democrat leaders who insisted the cuts to entitlements and social programs were too steep.

Option two: The McConnell plan will not pass either. First, it failed to get enough momentum from fellow Republicans (especially, you guessed it House Republicans) because it gives the President the ability to raise the debt ceiling on his own. Second, It was rejected by the White House because it raises the debt ceiling in three stages between now and next summer, something the President said he will not accept under any circumstances.

Option three: The so-called "Gang of Six" plan out of the Senate. The president initially endorsed that plan at the risk of losing a lot of support from his own party, once again due to the massive cuts it makes to Social Security and Medicare, to the extent that some Progressives are calling for a primary challenger for Obama in 2012. The "Gang of Six" plan also looks like it cannot pass the Republican controlled House because it has provisions to raise revenues. Even though the President seemed willing to go farther with spending cuts than most democrats approve of, there are still Republicans who will not support any plan that raises any additional revenues at all. So it looks like this one is dead too.

Option four: Cut Cap and Balance out of the House of Representatives. This plan has no chance of passing the U.S. Senate and no chance of being signed by the President. So this one is out too.

Option five: The "New Boehner Plan". It remains to be seen, but this one looks like it might be dead on arrival. After three days, it is still unclear whether or not it even has enough Republican Support to pass out of the House of Representatives. Speaker Boehner is faced with a couple of quandaries here. First, it cuts about three times less than the plan he was originally working on with the President, and it cuts less than the Reid plan being worked on in the Senate right now (check out this explanation by Ezra Klein on how the Congressional Budget Office scored them). Second, Boehner may only be able to pass his plan with majority Democrat support both the House and Senate. A move that would further expose the cracks in Republican Party unity. Mr. Boehner may already be past that point as some Tea Party leaders are already calling for him to step down as Speaker.

Option Six: The Reid Plan. This one got a better score form the CBO than did Boehner's plan. It doesn't touch entitlements which has the White House and Democrats at ease with it, but but relies on reduced war spending to cut expenditures. It appears however that it would still be dead on arrival in the House because it has revenues increases.

So where does that leave us? How is the Congress gong to get a plan to the President's desk before next Tuesday? It is easy to be skeptical that it is even still possible at this point (I do not think it is). This has led to House Democrats and even President Clinton to call for Obama to invoke the 14th Amendment and simply raise the debt ceiling on his own if Congress fails to do so in time. I still hope the Congress will do its job and raise the debt ceiling (with or without provisions). In the meantime, the clock is ticking....T-minus Six days and counting.....

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