New ‘Gang of Six’ Deficit Plan Could Break the Deadlock
Policy + Politics

New ‘Gang of Six’ Deficit Plan Could Break the Deadlock

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President Obama on Tuesday praised a new bipartisan plan emerging in the Senate, calling it “broadly consistent” with the White House’s approach to raising the debt limit and describing it as a “very significant step.”

“We’re in the same playing field,” he said, speaking from the White House.

As the top Democrat and the top Republican in the Senate finalize a plan they call a last resort, House Republicans are holding their own vote on an austere plan they call "cut, cap and balance."

The ambitious plan to slice $3.7 trillion from the federal budget over the next decade was gaining momentum in the Senate on Tuesday, after more than 40 Republicans and Democrats attended a morning briefing on the proposal.

The plan, drafted by a bipartisan group of senators known as the “Gang of Six,” has been in the works for months. After struggling to reach consensus and apparently disbanding last week, the group now says it’s nearing agreement on a proposal, which could offer an alternative strategy for pushing an increase in the debt limit through Congress before the Aug. 2 deadline.

“A Fair Compromise”
“We’ve gone from a Gang of Six to a mob of 50,” exulted Sen. Joe Manchin (D-W. Va.), as he emerged from the meeting. The proposal, Manchin said, “shows great promise.”

“I will support it. It is a fair compromise,” added Sen. Kay Bailey Hutchison (R-Tex.). “This is a way forward where we can do the work that we have come here to do.”

Details of the plan were sketchy and it was not immediately clear how the proposal might be combined with existing debt-limit strategies. As described by its creators, the framework calls for $500 billion in immediate spending cuts as a down payment on a broader debt-reduction effort that would be carried out largely by existing legislative committees.

Those committees would be given targets for savings from overhauling entitlement programs and rewriting the tax code. If the committees failed to produce a plan to meet the targets over the next six months, 10 senators — five from each party — could step in to offer their own debt-reduction plan.

The overall goals of the plan mirror Obama’s fiscal commission: deep cuts in government agencies, significant reductions in Medicare and a framework for keeping Social Security solvent over the next 75 years. It also seeks to raise $1 trillion taxes over the next decade by rewriting the tax code to lower tax rates for households in all income categories while eliminating various tax breaks and deductions.

Republicans and Democrats alike welcomed the plan. And while several said it would be difficult to bring it before the Senate before Aug. 2, they said it could provide a good alternative to the 12-member special committee proposed by Senate Majority Leader Harry Reid (D-Nev.), which many fiscal hawks were coming to view as a likely dead end in the debt-reduction process.

“Good Foundation for Debate”
“This is a good foundation for debate,” said Sen. Johnny Isakson (R-Ga.), as he left the meeting in an out-of-the-way conference room near the entrance to the Capitol. “They ought to get it to the point where it’s debatable by every member of the Senate, and not in a corner somewhere.”

Four of the original members of the Gang of Six — Democrats Mark Warner (Va.) and Kent Conrad (N.D.) and Republicans Saxby Chambliss (Ga.) and Mike Crapo (Idaho) — said the next step is to receive feedback from their colleagues and see whether they can get a filibuster-proof majority of 60 to sign on. Then they will decide how to move forward.

“This was always a debt-reduction exercise, not an extension-of-the-debt-limit exercise,” said Conrad, who chairs the Senate Budget Committee. “How those two come together or don’t, I don’t know the answer to that yet.”

The Gang of Six formed in the wake of Obama’s fiscal commission, an 18-member panel whose ideas sparked widespread interest but failed to win the needed 14 votes to send its recommendations to the floor of the House and Senate. Reluctant to let the effort fade away, commission members Conrad and Crapo joined forces with Warner and Chambliss to try to draft the commission plan into a legislation.

The Gang of Six stumbled after two other members — Sen. Richard J. Durbin (D-Ill.) and Sen. Tom Coburn (R-Okla.) — reached an impasse over cuts to entitlement programs and Coburn left the group in mid-May. A last-ditch effort to reach agreement last week failed, and members said the group had disbanded.
“We have a plan. We need a gang,” Durbin told reporters with evident frustration.

But on Tuesday, Coburn was back, saying the plan had been tweaked to add more than $100 billion in cuts to health care programs.“The plan has moved significantly, and it’s where we need to be,” he told reporters. “This creates the way forward to where we can solve our problems.”

The development comes as lawmakers and the Obama administration are struggling to develop a debt-reduction plan that would persuade a hostile Congress to raise the legal limit on government borrowing. Unless Congress acts to lift the $14.3 trillion debt limit by Aug. 2, Treasury officials have said the government will begin to default on its obligations.

The House was moving forward Tuesday with a separate proposal to cap government spending and make raising the debt limit contingent upon congressional passage of a balanced budget amendment to the U.S. constitution. With that plan given almost no chance of approval in the Senate — and with Obama threatening to veto it — House Speaker John Boehner (R-Ohio) conceded that quiet conversations are underway regarding alternatives.

“I’m not giving up on cut, cap and balance,” Boehner said. “But I do think it’s responsible for us to look at what Plan B would look like.”

Staff writer Rosalind S. Helderman contributed to this report.