Tea Party Debt Plan Takes Center Stage

Congressional leaders are giving tea party-backed Republican freshmen the run of the House this week with a plan to let the government borrow another $2.4 trillion.

The latest Republican plan to avert a looming default is a fierce statement of conservative principles that pushes the party's negotiating position farther to the right. Photo: Speaker Boehner/Flickr

After big spending cuts and adoption by Congress of a constitutional amendment requiring a balanced federal budget tea party-backed Republican freshmen are given the run of the House with a plan to let the government borrow $2.4 trillion.

“Cut, cap and balance” plan is set to pass the House on Tuesday but is sure to stall in the Senate, where majority Democrats say it would lead to decimating budget cuts and make it harder to pass tax increases on the wealthy.

Even if the scheme could pass, there’s no way Congress will adopt a balanced budget amendment, which requires a two-thirds vote in both House and Senate.

But tea party lawmakers are insisting on trying to put their stamp on the debate over the so-called debt limit, and GOP leaders were quick to give their OK at a spirited closed-door meeting on Friday.

The tally will be held exactly two weeks before an August 2 deadline to avoid a potentially devastating default on U.S. obligations like payments to bondholders and senior citizens receiving Social Security.

Rep. Jim Jordan, R-Ohio, said: “Let’s let the American people decide.” And he added: “Do they want something common sense as cutting spending, capping the growth in government and requiring a balanced budget amendment to the Constitution?”

Plan B appears to be to have the Senate vote to give President Barack Obama sweeping power to order increases in the debt limit totaling $2.5 trillion over the coming year without approval by lawmakers.

The hope appears to be that after trying it their way, enough House Republicans will be able to stomach the emerging Senate plan to allow it to pass, though it’s plain there will have to be plenty of Democrats voting for it as well to make up for dozens of unyielding lawmakers unwilling to abandon their tea party promises.

Senate Republicans are demanding a vote this week on a balanced budget constitutional amendment, though they have zero chance of winning the required 67 votes in a chamber. Dick Durbin of Illinois, the No. 2 Senate Democrat, stated Sunday on CBS: “No  one believes there are 67 votes for any version of that. Face The Nation.”

The government faces massive budget gaps – it now borrows more than 40 cents of every dollar it spends – that the cuts required to eliminate the deficit were too Draconian for even the GOP-dominated House to endorse balancing the budget anytime soon.

The House Republican budget still leaves deficits in the $400 billion range after 10 years. USA continue to borrow from investors and foreign countries like China to pay its bills – which include a $23 billion batch of Social Security payments set to go out the day after the default deadline.

The cagey leader of the party in the Senate Sen. Mitch McConnell has proposed a plan. This plan would allow Obama to automatically win a large enough increase in the debt to keep the government afloat until 2013 unless both House and Senate override him by veto-proof margins.

Though McConnell’s plan has advantages it has come under assault from many conservatives eager to take advantage of the current opportunity to use the need to lift the debt ceiling to force deficit cuts now.

But Republicans refuse to consider any tax revenue increases demanded by Obama and Democrats to balance any budget package, and Democrats won’t go along with significant cuts to benefits programs like Medicare and Medicaid unless tax increases on the wealthy are a part of the package.

That leaves lawmakers well short of the $2 trillion-plus in deficit cuts required to offset a debt increase that’s big enough to solve the problem through next year’s elections.

Also a package of spending cuts, perhaps in the $1.5 trillion range over the coming decade, would be attached to the McConnell-Reid measure, perhaps in the House. [via The Huffington Post, Reuters and ABC News]

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