The RP’s Budget Crisis Update- July 31 Part 2

Following the failure of the Reid bill in the Senate on Sunday, the plan currently being worked on by President Obama and Sen. McConnell is the last major budget plan on the table.

The Atlantic provides a useful overview of the state of budget negotiations now that the Obama-McConnell plan, nebulous though it may be at this point, is the only budget plan (apart from the Gang of Six’s much maligned “Back in Black”) on the table in Congress. [The Atlantic]

More details are emerging about the Obama-McConnell debt reduction plan, including increased powers being granted to “Super Congress,” a bipartisan, bicameral council of 12 lawmakers who will have to make spending cut recommendations by Thanksgiving or face automatic, across-the-board spending cuts. This body has been demanded by Republican lawmakers, though Democratic leadership has only recently agreed to its existence. Neither the Tea Party nor the left wing of the Democratic Party is fond of the notion, as Tea Party factions believe it raises the possibility of increasing the debt whilst some Democratic groups balk at the notion that its actions may lead to deep, even automatic, cuts in Medicare, Medicaid, and Social Security. [Huffington Post]

The Reid plan for debt reduction failed in the Senate, leaving the fate of the Obama-McConnell plan somewhat in question, especially given Speaker Boehner’s difficulty in rallying his caucus behind previous plans. [Talking Points Memo]

According to Gene Sperling, Director of the National Economic Council, there are three provisions that must be in a final budget deal for President Obama to support it: That the bill include a “significant down payment” on the US’s debt, that revenues be part of a final plan, and that uncertainty be removed from the market. Although the plan as it is believed to exist includes only spending cuts, Obama Administration officials, most notably David Plouffe, insist that any recommendations by the “Super Congress” will be their nature have to include revenue raisers. [Roll Call]

Tea Party activists are exhibiting increasing displeasure at the House Republicans’ willingness to compromise on debt and budget concerns, with some taking issue with the fact that a debt ceiling increase has been approved at all. As in 2009, many of these groups have threatened incumbent lawmakers, even those who were elected with Tea Party support, with primary challenges. [Politico]

Although the Senate is technically in recess at the moment, Majority Leader Harry Reid has told Senators not to stray too far from the chambers, indicating the possibility that they will vote on the Obama-McConnell plan in the near future. In a tongue-in-cheek move, the Nevada Democrat said “I would not suggest a ball game” (Nationals Park is barely a mile from the Capitol). [The Hill]

Possibly in an effort to assuage liberal activists, President Obama and his administration have said that they will continue to push for revenue raisers, including repealing the Bush tax cuts, in spite of the fact that the Obama-McConnell plan does not explicitly include anything other than spending cuts. The administration’s plan includes using the cuts’ 2012 expiration as a sort of trigger to increase revenue increases, with the President possibly utilizing a veto after the election even if he loses. [Washington Post]

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