Reid Budget Plan Would Save More Than Boehner, Less Than Touted, CBO Says
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|Wed, 07-27-2011 - 11:46am|
Less than a week from a potential U.S. default, Congress’s budget scorekeeper said rival House and Senate debt-cutting plans fall short of savings goals as lawmakers struggled to find a compromise and rework proposals.
House Speaker John Boehner’s plan would save just $850 billion rather than the advertised $3 trillion, forcing him to make revisions and postpone a vote scheduled for today after fiscal conservatives raised concerns.
Senate Majority Leader Harry Reid has scheduled a news conference at 11:45 a.m. Thus far Republican leaders have scheduled no news conference.
The non-partisan Congressional Budget Office said Reid’s plan would cut $2.2 trillion over 10 years, shy of the $2.7 trillion target. The savings fall below the $2.4 trillion figure needed to meet Republican demands that a debt-limit extension be accompanied by an equal amount of savings. President Barack Obama is insisting on a debt-limit increase large enough to last through the 2012 elections.
“We’re working through it,” said House Rules Committee Chairman David Dreier. Among opponents, “some have said they’ve changed their position, some have said they’ll rethink their position, so I’m encouraged.”
Dreier, a California Republican, said he expects a reworked version to come before his panel today, setting up a vote by the full House tomorrow.
Treasuries pared losses today as Pacific Investment Management Co.’s Mohamed A. El-Erian said there will be “massive consequences” if the U.S. loses its AAA credit rating. The benchmark 10-year note yielded 2.96 percent. Stocks fell also, pulling the Standard & Poor’s 500 Index lower for a third day.Adjusting the Bill
At a closed-door meeting of House Republicans today, Boehner told lawmakers he is still adjusting his bill, said lawmakers who attended.
There was some laughter and clapping coming from the room. As they left, some lawmakers said Boehner is shoring up backing.
“Support for his proposal is growing,” said Representative Lamar Smith, a Texas Republican.
At the session -- the third such meeting in 24 hours -- Budget Committee Chairman Paul Ryan explained that CBO estimated less savings than was promised because it used a different starting point than leaders anticipated, said Representative Scott Garrett of New Jersey.
Representative Tom Reed, a first-term Republican from New York, said he was up through the middle of the night trying to decide how he’ll vote on Boehner’s proposal. He said he decided around 4 a.m. to line up with the speaker after saying yesterday he would oppose it.‘A Firm Yes’
“At this point in time, I’m a firm yes,” Reed said. “We’ve been looking at this real hard. This has been a very stressful period of time. It’s not exactly what I’m looking for, it’s not what we came to Washington to do, but it’s a step in the right direction.”
The Reid proposal saves more than $1 trillion through what Republicans call a budget gimmick that takes advantage of a quirk in how the CBO is required to forecast war costs, according to the analysis.
“We are glad Congress’s budget referee agrees that the Senate bill cuts the deficit by $1.3 trillion more than Speaker Boehner’s bill,” said Reid spokesman Adam Jentleson. “It becomes clearer by the hour that the Senate bill is the only true compromise in Congress.”
Both Reid, a Nevada Democrat, and Boehner, an Ohio Republican, proposed creating a special budget-cutting committee to help find cuts, for which the CBO refused to credit any savings because it couldn’t predict whether or how much the panels would eventually agree to cut.Talks With Obama
Boehner devised his own plan after his debt-reduction negotiations with Obama and congressional Democrats broke down.
Adding to Boehner’s woes, Republican presidential candidate Michele Bachmann, a Minnesota congresswoman who has said she won’t back raising the debt ceiling, opposed Boehner’s plan. “The premise is wrong that we begin with increasing the debt ceiling,” she told reporters yesterday in Ankeny, Iowa.
Three investment firms -- BlackRock Inc., Loomis Sayles & Co. and Franklin Templeton Investments -- said the U.S. faces losing its AAA credit rating as the debate continues.
“Our guess is, when push comes to shove, the debt ceiling will be raised,” said Bob Doll, chief equity strategist at New York-based BlackRock, which manages $3.66 trillion. “What goes along with that is very difficult to tell, and that’s why the threat of a downgrade still exists,” Doll said in an interview today on Bloomberg Television.
“Rating agencies have told us it’s not only a long-term debt, but the fact that you are lurching day to day, week to week, with no resolution on the debt ceiling” that is leading to a potential downgrade of the AAA credit rating, he said on Bloomberg Television today.