Deficit Update: Deal Or No Deal?

Posted on July 22, 2011. Filed under: Uncategorized | Tags: , , , , , , , , , , , |

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Senate CCB Vote Moved Up to Today

Reid has moved the Senate vote on the House cut, cap, and balance bill up to today. This vote originally had been scheduled to occur Saturday. Here are a few of Reid’s choice comments on this CCB legislation:

“House Republicans’ pending cut, cap and balance proposal is among the worst pieces of legislation to appear on the floor in Senate history.”

“I think this piece of legislation is about as weak and senseless as anything that has ever come on this Senate floor. I am not going to waste the Senate’s time day after day on this piece of legislation.”

“The American people should understand that this is a bad piece of legislation, perhaps some of the worst legislation in the history of this country.”

“What I have to say is this. The President always talked about balance. There has to be some fairness in this. This can’t all be cuts. There has to be some revenues. The caucus agrees with that. I hope the President sticks with that and I am confident he will.”

Senate Dems Incensed About Rumored Obama-Boehner $3.7 Trillion Deal

Jack Lew, Director of OMB and a key negotiator for the President, met with Senate Dems in an angry Capitol Hill session yesterday afternoon in which they strongly protested any back-channel Obama-Boehner deal that leaves them out of the loop and potentially facing an up-or-down vote on huge discretionary spending and entitlement cuts without any new revenue.

Sen. Barbara Mikulski (D-Md.) said many Democrats were “volcanic” in the meeting with Lew over the idea of a budget deal that would not include new revenues. Senate aides confirmed, “There’s a basic lack of trust with the President.”

“It would be very hard to take Republicans at their word that they would do anything later on”, said Sen. Sheldon Whitehouse (D-RI).

Sen. John Kerry (D-MA) stated, “A year is way too long for Democrats to wait for tax reforms if they agree to trillions of dollars in spending cuts now”.

Sen. Feinstein (D-CA) indicated, “A deal that would implement trillions in spending cuts immediately and postpone tax reforms until next year to raise new revenues is a nonstarter”.

Labor groups also expressed dismay over “proposed cuts of $383 billion to $500 billion in healthcare and tax reform that would lower the income tax rate for the nation’s wealthiest earners” that are rumored to be included in the Obama-Boehner $3.7 trillion deal. They are threatening a nationwide media campaign against such an agreement.

Kerry and at least 14 other Senate Democrats, including Sen. Michael Bennet (D-CO), favor the bipartisan Gang of 6 proposal rather than the rumored Obama-Boehner no-new-revenue deal. Both proposals are said to produce $3.7 trillion in savings over 10 years, but the Gang of 6 plan requires $1 trillion in new revenue.

White House Says “There is no deal”

While all this fury was boiling over on the Hill, Obama’s press secretary and other Administration officials kept repeating, “There is no deal”. Technically, this may be true in the sense that no Obama-Boehner deal has been finalized. However, this “no deal” claim appears to run counter to what other White House officials implied to House and Senate Democrats this afternoon.

Two senior Democratic sources confirm that White House officials told Democrats that “Obama and Boehner are moving closer to a deal that would include spending cuts and concrete entitlement reforms, but put off tax reform until next year”. Notice that revenues aren’t mentioned in this statement. Dems are convinced there aren’t any new revenues in the pending deal.

Democrats’concern is also focused on whether Bush-era tax cuts would be further extended under the pending Obama-Boehner deal, or be allowed to expire at the end of calendar 2012, per the agreement the President made with Republicans last winter. Both Congressional Democrats and the President have promised to end the Bush-era tax cut for the wealthiest Americans at the end of next year. Many House Republicans want both a further extension of all Bush-era tax cuts beyond 2012, and tax reforms that lower individual and corporate tax rates in 2013 and beyond.

Boehner Announcement of a Compromise Scheduled for This Morning

Of great interest is the fact that Boehner is scheduled to share a “major compromise proposal” with House Republicans in a closed-door session later this morning. If there is an Obama-Boehner $3.7 trillion deal in the works, Boehner would be expected to “run it by his caucus” before making a final commitment to the President that it can pass the House.

Obama risks losing the future support of his Democratic colleagues in both chambers if he negotiates and attempts to pass a $3.7 trillion 10-year deal with no new revenue and only promises of an attempt at tax reform next year. Such a deal is already being painted as “total capitulation to House Republican blackmail”.

Such a deal would leave Dems with none of the items they insisted must be part of any multi-year deficit reduction agreement. One wonders if the screams of protest coming from Democrats yesterday were orchestrated by the President to prove to Republicans that new revenues must be included in any long term deficit reduction deal, even if new revenues are not incorporated into a short-term debt ceiling increase deal.

Meanwhile, House Republicans put another nail in the Plan B coffin. A letter sponsored by Rep. Joe Walsh (R-IL) that now has 86 signatures urges Boehner to block House consideration of the McConnell-Reid bill.

Turner GPA is one of the premier, highly respected government and public affairs firms in the nation. Turner’s state-of-the-art advocacy has earned them respect and acclaim from the media, clients, policymakers and even their competitors! Turner advocates on behalf of cutting edge businesses, municipalities, and non-profits that wish to ensure their perspectives and needs are taken into account in Washington, in state capitols and in City Hall, as well as in the media. The firm creates and implements intensely focused and targeted advocacy campaigns designed to meet and exceed its client’s expectations and goals. For more information on Turner GPA, visit www.turnergpa.com or call 202-466-2511.

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