Gang of Six in the Senate Releases Proposal
The White House and Congressional leaders continue to suffer through a stalemate in their negotiations to reach a compromise deal on a deficit reduction plan as it relates to increases in our nation’s debt limit. According to the Treasury Department, we must raise the debt limit by August 2 or face defaulting on our obligations for the first time in our country’s history. On the August 3 the Treasury will not have enough money coming in to cover scheduled payments.
While hope remains that President Obama and Speaker John Boehner (R-OH) – who are meeting today – can still come to a deal on a long term deficit reduction package there has been talk that a short-term deal to temporarily increase the debt limit could be agreed upon, while a longer term deal is negotiated. This scenario has become more plausible over the past couple days for two main reasons:
- President Obama has moved off of his position that he would not accept a short-term deal; and
- A bipartisan group of Senators known as the “Gang of Six” released their deficit reduction proposal, which has drawn more support than opposition thus far.
The President has moved in support of a short term increase so both parties can accomplish a broader deficit reduction plan. The short term deal would allow a larger plan to move through the legislative process, which could take weeks or months.
The
“Gang of Six” proposal is a $3.7 trillion deficit reduction proposal that has received some support from Republicans and Democrats. The plan would immediately cut $500 billion in spending to bring down the deficit. It would also include major tax reform that would net out with about $1.5 trillion in overall tax savings.
The plan calls for ensuring the solvency of the Highway Trust Fund by providing $133 billion through 2021 in revenue to the Trust Fund. The problem with this provision is they say it should be done without raising the gas tax and offer no alternative.
Much of the Gang of Six plan would require other agencies and congressional committees to work to find savings, establish guidelines for $80 billion in armed service cuts and $70 billion from health, education, labor and pensions. Under the plan, the Budget Committee would be required to set spending caps that would extend over the next decade.
The deficit reduction remains very fluid and the path forward is still not clear. AGC will continue to monitor the situation.
For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@ag.org.
