–House Republican Leaders Set House Vote Week of July 25
–Senate Minority Leader Seeks Senae Vote After July 4th Recess
–Budget Experts Say GOP Wants Amendment Vote For Debt Hike Protection
–Geithner: Must Raise Debt Limit Regardless Of Spending Path

By John Shaw

WASHINGTON (MNI) – For some, its return is perplexing. For others,
it is preposterous. Still, for others it’s politically shrewd.

This summer, Congressional Republican leaders are reviving a
balanced budget constitutional amendment more than 15 years after it was
last seriously considered by Congress.

House Majority Leader Eric Cantor has announced the House will vote
on a balanced budget amendment the week of July 25.

Senate Minority Leader Mitch McConnell said Wednesday that
Republicans in the Senate will press for a vote after the July 4th
recess.

McConnell said all 47 Senate Republicans now support a balanced
budget amendment. Passage of the amendment in the Senate would require
67 Senate votes.

The return of the balanced budget amendment comes at a time in
which the U.S. has run budget deficits of about $1.5 trillion over the
past several years.

Most budget projections show the U.S. running very large deficits
for decades to come.

Bill Hoagland, a former Republican staff director of the Senate
Budget Committee and now a vice president at CIGNA, says he believes any
vote this summer on a balanced budget amendment will largely be for
political reasons.

“This is a political cover vote. It allows conservatives to be able
to go home and tell their constituents that they voted to put balanced
budget requirements in the Constitution,” Hoagland said.

“The fact that it is coming up around the time of possible debt
limit votes is not coincidental. This is about political protection. The
balanced budget amendment is not designed to actually become part of the
Constitution,” he said.

Hoagland, one of the nation’s shrewdest budget analysts, said he is
discouraged by the state of the current talks over the deficit reduction
and the debt limit.

He said that it is unlikely that Congress and the White House will
be able to agree on the kind of deficit reduction plan that is needed to
begin driving deficits and debt down.

“I don’t see a $4 trillion, 10 year agreement coming any time
soon,” he said

But Hoagland believes Congress and the White House will find a way
to pass debt ceiling legislation before August 2.

“Despite all of the public fighting, I think quiet talks are going
on to figure out a way to lock-in some of the savings that the Biden
group identified — and then get the debt ceiling increased,” he said.

“There are ways to get at least a trillion in savings on paper
pretty easily. In fact, you’re just about there if you say you will
freeze discretionary spending for ten years,” he said.

Hoagland said he can envision a scenario in which Congress and the
White House agree in July on a package of about $1 trillion in savings,
increase the debt ceiling by a $1 trillion and then return in September
to begin to work for a larger agreement.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Tim Geithner has said Congress must pass legislation
increasing the debt ceiling by August 2.

President Obama Wednesday called on Congress to redouble efforts to
pass debt ceiling legislation and pass a “balanced” deficit reduction
plan that includes spending cuts and revenue increases.

In a letter to Sen. Ron Johnson Wednesday, Geithner warned that
“regardless of which spending path is adopted, the debt limit must be
increased.”

Geithner said a failure to enact a timely increase of the debt
limit would raise the government’s borrowing costs and worsen the U.S.
fiscal challenges.

“Now is the time to go ahead and make the tough choices,” Obama
said at a news conference Wednesday afternoon.

In a statement, House Speaker John Boehner said Obama’s suggestion
“ignores legislative and economic reality,” adding that he is “soley
mistaken” if he believes a budget package with tax increases can pass
the House.

** Market News International Washington Bureau: (202) 371-2121 **

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