Budget experts raise concerns over McConnell debt-limit fallback plan

Liberal and centrist budget experts are joining conservatives in raising red flags about the debt-ceiling plan that is being hashed out by Senate leaders as a last-ditch option for avoiding a national default.

Despite their reservations, some experts see an upside if a new binding debt commission can be attached to the package.
 
{mosads}Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) have been negotiating a modified fallback plan that could allow President Obama to raise the debt ceiling three times unless Congress disapproves.

The idea, first floated by McConnell, would have the effect of pinning the blame for the increasing debt solely on Obama’s shoulders.
 
One possible change under discussion is to attach a package of spending cuts of about $1.7 trillion to please conservatives in the House. Another idea is to establish a special bipartisan lawmaker committee to craft a deficit-reduction package that would later come straight to the floor for a vote.
 
Conservatives in the House have already said the idea of surrendering power to Obama is a non-starter, but House Speaker John Boehner (R-Ohio) on Friday did not rule out the McConnell plan as a last-ditch option.
 
The conservative Club for Growth came out strongly against the debt-ceiling contingency plan this week, and said it would score any vote on the proposal.
 
“RINOs [Republicans In Name Only] should be under no illusions: voting for the McConnell deal is the same as voting to raise the debt ceiling with nothing in return,” Chris Chocola, the group’s president, said in a statement.
 
Rebecca Thiess of the liberal Economic Policy Institute told The Hill she opposes the Reid-McConnell compromise since it appears to involve only spending cuts and not tax increases.
 
“As for the hybrid of the McConnell plan — the one that would likely require $1.5 trillion or more in spending cuts along with transferring authority (and thus blame) on raising the limit to the president — it’s not what I would like to see,” she said in an email. “It seems like this hybrid has emerged to make the deal more palatable to extremely conservative members of the House.”
 
She said it is a worse option than the original McConnell proposal, which involved a clean debt-ceiling increase.
 
“I don’t think it would be a very good idea policy-wise and I don’t think it would be a very good move politically on the Administration’s part,” she said.
 
Chad Stone of the liberal Center for Budget and Policy Priorities said his organization believes raising the debt ceiling and avoiding budget cuts that wound the economy are the biggest priorities.
 
He said he is not advocating for the McConnell proposal, but said at least it would allow the U.S. to avoid a default. Like Thiess, he expressed concern about any modifications that would involve a deal consisting only of spending cuts.
 
“We also think it would be unwise to enact a spending-cuts-only deficit-reduction package,” he said.
 
Maya MacGuineas of the New America Foundation in a Friday op-ed piece on CNN.com laid out her objections to the fallback plan. MacGuineas has worked closely with the Senate Gang of Six in search of a grand deficit bargain and does not want lawmakers to give up now.
 
“This is not supposed to be who we are: a country fighting over whether to pay our bills, being scolded by rating agencies — including in China — and on track to leave a shredded economy to the next generation because we spent years on a spending spree without paying the bills,” she wrote. “And it should not be acceptable for policymakers to run from this problem and promise themselves and the country they will get to it … right after the next election.”
 
Bob Bixby, executive director of the Concord Coalition, blasted McConnell’s proposal as a cop-out.
 
{mosads}“The best that can be said about this politically cynical idea is that it would defuse an immediate crisis. It would do nothing, however, to address the structural mismatch between spending and revenues,” he said of the original McConnell idea.
 
Bixby has an alternative solution: raise the debt limit by $1.9 trillion, because that is the amount by which the debt limit would have to be raised to implement the House Republican budget through 2012; pass fiscal targets and automatic triggers to ensure that the goals are reached, and then use the regulator budget process to hammer out the details. This would involve the Senate acting on a budget and having it melded with the House-passed budget in conference.
 
David Kendall of the Third Way said he was warming to the McConnell proposal with the Reid changes.
 
“This is more promising,” he said.
 
“He should still push for a big deal, but he may have no choice but to sign some version of the McConnell proposal,” he said.
 
He said the proposal for a debt commission with guaranteed votes in Congress is progress because it improves upon the fiscal commission.
 
Senate Budget Committee Chairman Kent Conrad (D-N.D.) and former ranking member Judd Gregg (R-N.H.) had in 2010 sought to create a fiscal commission with a guaranteed vote in Congress, but it was unable to get 60 votes in the Senate. A toothless fiscal commission was created instead, and congressional leadership and Obama largely ignored its bipartisan recommendations.
 
Kendall said the Reid proposal brings Congress back to that moment, and gives a bipartisan deal a new chance.
 
Steve Bell of the Bipartisan Policy Center said the original McConnell proposal was a letdown.
 
He said Wall Street would probably be satisfied with the initial McConnell proposal since it’s used to expecting little from lawmakers. “For a guy like me that cares about deficit reduction, it is disappointing,” he said.
 
But he said adding a binding commission to it could “snatch victory from the jaws of defeat.”