The ‘Gang of Six’ proposal to head off default

What happened

Hopes for a deal to resolve the impasse over the federal debt ceiling grew this week, with the emergence of a new “grand bargain’’ by a bipartisan group of U.S. senators. The proposal, by the Senate’s “Gang of Six,” would reduce the deficit by an estimated $3.7 trillion over the next 10 years, by cutting domestic and Pentagon spending, reforming Social Security and Medicare, and overhauling the tax code to bring in an additional $1 trillion in revenue. President Obama threw his support behind the plan, which he called a “significant step” with the “potential for bipartisan consensus.” But with less than two weeks to make the proposal law before the government starts running out of cash on Aug. 2, Senate leaders focused on a stopgap measure, drawn up by Senate Minority Leader Mitch McConnell, that would permit Obama to raise the debt limit without congressional approval. Under the deal, a bipartisan committee would then negotiate a long-term debt-reduction plan.

House Republicans, meanwhile, passed a debt-ceiling bill of their own this week. The “Cut, Cap, and Balance” bill would add a balanced-budget amendment to the Constitution, and would slash government spending from the current rate of 24 percent of gross domestic product to 18 percent overnight—a requirement that would cut hundreds of billions from discretionary spending. The Democratic-controlled Senate is nearly certain to vote it down. Tea Party–backed conservatives insisted, however, that they would not vote for any plan that raised taxes or delayed decisions on cuts. Rep. Allen B. West (R-Fla.) said those proposals were “nothing but the typical D.C. two-step, and I’m not going to be part of that.”

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What the editorials said

House Republicans need to stop playing partisan games, said The New York Times. The first federal government default in U.S. history is looming, and credit ratings agencies Standard & Poor’s and Moody’s are warning that they will issue a “once-unthinkable” downgrade of the U.S. credit rating if a debt-ceiling deal isn’t reached. That’s why Congress has little choice but to approve McConnell’s plan for now, said The Washington Post. That’ll buy time to work out the details of the very promising Gang of Six proposal, which would make serious cuts in spending, “while protecting programs for the neediest Americans.’’

Serious cuts are needed, but the House Republicans’ Cut, Cap, and Balance plan goes too far, said The Wall Street Journal. Amending the Constitution to require balanced budgets could have “unintended consequences,’’ such as massive reductions in Pentagon spending; it could even be used by Democrats to justify large tax increases in future years. Let’s cut spending by all means, but “leave the Constitution out of it.”

What the columnists said

The Gang of Six proposal may be the “deus ex machina” that wards off disaster, said Jon Healey in the Los Angeles Times. It would get the federal deficit under control within three years, and reform the tax code to eliminate numerous corporate and individual tax breaks, while lowering tax rates across the board. That would allow both parties to “claim some kind of victory.” Not likely, said Jennifer Rubin in WashingtonPost.com. The Gang of Six plan contains “just about every bad idea advanced so far in the debt debate,” including $1 trillion in tax hikes and $886 billion in defense cuts. House Republicans will not support any proposal that raises taxes.

If those Republicans think the public is with them, said Steve Benen in WashingtonMonthly.com, they’re wrong. A new CBS poll finds that only 21 percent of Americans agree with the GOP’s no-compromise stance in the debt-ceiling negotiations. Sadly, House hard-liners figure that the 21 percent “is the base that shows up on Election Day.’’ So why worry about anyone else?

That’s what scares me, said Jonathan Cohn in TheNewRepublic.com. Both McConnell and House Speaker John Boehner know a default would damage both the country and their party. But the fact that the Gang of Six plan has Democratic support “makes it a nonstarter with House Republicans.’’ It’s unclear if Boehner can muster enough GOP votes to get anything passed by Aug. 2.