Boehner to rework his debt-ceiling bill

Speaker John Boehner (R-Ohio) will rework his two-step plan to raise the debt ceiling after the Congressional Budget Office (CBO) found the bill would not cut as much spending as promised. 

“We’re here to change Washington — no more smoke-and-mirrors, no more ‘phantom cuts.’ We promised that we will cut spending more than we increase the debt limit — with no tax hikes — and we will keep that promise,” Boehner spokesman Michael Steel said.

{mosads}The CBO informed Boehner on Tuesday that his debt-ceiling fallback plan would reduce the deficit by about $850 billion over 10 years.

House GOP rank-and-file members had been waiting eagerly for the score, as they were worried the bill would not measure up to claims made by House leadership.

Leadership on Monday said the bill would reduce discretionary spending by $1.2 trillion over 10 years in return for a $900 billion increase in the debt limit. 

Boehner this spring said Congress would only raise the debt ceiling if spending cuts exceed the amount by which the debt ceiling is raised.

“As we speak, congressional staff are looking at options to rewrite the legislation to meet our pledge,”Steel said. “This is what can happen when you have an actual plan and submit it for independent review — which the Democrats who run Washington have refused to do.”

White House Budget Director Jack Lew weighed in on the CBO score in a Tuesday night blog post and highlighted the fact that under the January baseline it can be said to cut the deficit by $1.1 trillion. He noted that the House-passed budget and Obama April budget speech all used the January baseline as the measurement of deficit cutting.

“Indeed, throughout our weeks of talks, all parties have worked off a January baseline because we all recognized that we needed to start from the same place,” he wrote. “That is why it would be confusing to judge the current proposal’s savings from the ‘adjusted March 2011 baseline’ which CBO released in May.”

Lew’s move may be in anticipation of the score the Reid plan is to receive from the CBO. That plan claims to cut $2.7 trillion while authorizing a debt ceiling increase through 2012.

“Don’t get me wrong: there is a lot in Speaker Boehner’s plan that we do not like and actively oppose. But, as this debate continues and intensifies in the coming days, it’s important that we compare apples to apples, and make sure that we are all understanding the facts,” he wrote.

The CBO revealed the score in a Tuesday letter to the Speaker. 

The score is against the latest CBO baseline, as adjusted to reflect the 2011 spending-cuts deal between Congress and the White House that cut $38 billion in budget authority. Those 2011 cuts have ripple effects over the budget window.

The CBO also has determined that taking that earlier deal into account,
the spending levels in the Boehner plan mean a $1.1 trillion cut in the
deficit over 10 years. 

Most of the effects of the Boehner plan come from caps it imposes on discretionary spending. Next year the cap is $1.043 trillion, a $6 billion drop from current budget authority levels.

For 2012, CBO said the Boehner plan would reduce the deficit by just $1 billion. Discretionary spending is actually cut by $4 billion, but mandatory spending due to increased Pell Grant funds is increased by $3 billion.

Actual federal spending outlays in the 10-year period would be reduced by $710 billion relative to that March baseline, CBO said, if the discretionary spending caps in the Boehner plan are instituted. 

Overall, savings in discretionary spending are cut $695 billion, mandatory spending is cut by $20 billion and the savings in interest equals $135 billion.

CBO also looked at other more minor provisions in the Boehner bill. One would provide extra funding for Pell Grants to students — and this costs $17 billion — while another would limit other student loans and save more than $30 billion. 

The Boehner plan is a two-step process whereby the debt ceiling would be raised before Aug. 2 and then again next year. 

The CBO score reflects part one of the process, which grants President Obama the right to request a $900 billion increase in the debt ceiling, slightly more than the amount CBO said the Boehner plan cuts from combined deficits compared to the March baseline.

CBO does not assign a score to the second phase of the Boehner proposal, which would require a joint committee to come up with a plan to cut $1.8 trillion from the deficit by Nov. 23.

This post was updated at 6:55 p.m.