Mr. President, how immediate is $ 500 Billion debt cut?
President Barack Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could offer a way out of the congressional deadlock over raising the U.S. borrowing limit.
“We now are seeing the potential for a bipartisan consensus,” Obama said today at the White House. He called the proposal by the so-called Gang of Six “broadly consistent” with what he has sought and “a very significant step” in so far fruitless negotiations between Republicans and Democrats over boosting the nation’s $14.3 trillion borrowing authority before a threatened default on Aug 2.
At the Capitol, the bipartisan group led by Republican Senator Saxby Chambliss of Georgia and Senator Mark Warner of Virginia pitched its plan for an immediate $500 billion in spending cuts followed by a longer-term effort to force bigger reductions and $1 trillion in tax increases. The plan calls for lowering tax rates and limiting the growth of entitlement programs such as Medicare and Social Security.
About 50 senators, roughly evenly divided between the two parties, attended a closed-door briefing on the plan, a sign of potentially widespread support for the kind of “grand bargain” to reduce the debt that Obama is urging. One member of the Republican leadership, third-ranking Senator Lamar Alexander of Tennessee, publicly endorsed the plan.
“In the next 24 hours, you’re going to see a significant portion of the Senate come behind this — bipartisan — maybe 60 members, and let’s see how things roll,” said Republican Senator Tom Coburn of Oklahoma, who rejoined the Gang of Six today after he abandoned the talks in May over an impasse on Medicare cuts. “This doesn’t solve our problems, but this creates the way forward where we can,” he said.
House Majority Leader Eric Cantor, a Virginia Republican, said in a statement issued tonight on the Gang of Six proposal that “while there are still portions that are unclear and need more detail, this bipartisan plan does seem to include some constructive ideas to deal with our debt.”
It would institute an initial $500 billion of spending cuts, then lay out targets and enforcement mechanisms for forcing more future reductions, including between $85 billion and $202 billion in Medicare and other health spending, $80 billion from defense, $70 billion from education and labor programs and $11 billion from agriculture programs, according to a summary.
It would also call for a broad tax overhaul that would raise $1 trillion by limiting breaks for health, charitable giving, homeownership and retirement while lowering individual and corporate tax rates. And it would scrap the Alternative Minimum Tax, a parallel system designed to prevent higher- earners from avoiding taxes.
Read complete story Obama Embraces Senators’ Deficit-Cutting Plan