Gang Of Six To The Rescue?
The cloud covering Washington and the beleaguered House of Representatives received an unexpected ray of sunshine from the bipartisan committee known as the “Group of Six.” The ambitious deficit reduction plan provides for $3.75 trillion in spending cuts and $1.2 trillion in increased revenue.
Senators Mitch McConnell and Harry Reid have been developing a fallback plan in the event no other plans are accepted and enacted prior to the August 2nd deadline. A House plan to tackle the budget will be voted on tomorrow, but there is little hope the bill can pass the Senate or avoid the Presidential veto.
President Obama embraced the Gang of Six plan and encouraged the Senate to get an acceptable plan together as soon as possible. The President was clearly pleased with the balanced approach the 3 Republicans and 3 Democrats crafted. In the House Republican Speaker John Boehner was careful with his words but fell short of endorsing the proposal.
The McConnell fallback plan and the Gang of Six plan must be seen as a blow to the Tea Party members who are raising havoc in the House. Boehner is fighting off attempts by Eric Cantor of the Tea Party to hold onto his role. The Gang of Six and the rest of the country doubt any reasonable legislation can come from the House.
The 100 member Senate was briefed Tuesday and responded well to the plan which has elements of compromise for both sides. In particular, the plan includes plans to reduce faulty practices in Medicare and Medicaid and will modify components of Social Security.
Democrats will need to fall in line with these “entitlement changes” and Republicans will have to accept revenue increases. Both sides will need to accept the debt ceiling increase.
The Gang of Six proposal was well received on global equity markets. The Dow Jones appeared to like the newfound spirit of cooperation in the Senate and ignore the disruptive House. The Dow Jones recorded its best day since March. The scope of the plan leads to enthusiastic responses from everyone except Tea Party members who may be deemed child-like in their ability to achieve constructive legislation.
While the Republican Party struggles to find out “Who’s on First,” the more mature members of the Senate will merge with Democrats in support of these options or a combination thereof. Even if the plan passes the Senate and is turned away at the House, Obama has a right to veto the House vote and would then only need one-third of the House members to support the proposal.
As the deadline date of August 2nd approaches, the plans may still face logistical problems but at least there appears light at the end of the tunnel. The scope and depth of the Gang of Six plan is cause form optimism that there are still some officials in Washington that are listening to the taxpayers.
As expected, Tea Party activists immediately attacked the plan and Senator McConnell, who understands the risks of a default. Progress is progress.
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