–House Speaker’s New Bill Threatened By CBO, GOP Conservatives and Veto
–CBO Says Boehner Bill Would Cut Deficits By $850 Billion Not $1T
–Senate Minority Leader McConnell Urges Hill To ‘Re-engage’ With Obama

By John Shaw

WASHINGTON (MNI) – The plan of House Speaker John Boehner to
quickly pass a new House Republican debt ceiling plan unraveled Tuesday
after the Congressional Budget Office released a cost estimate that
showed the bill falls well short of its goal of $1 trillion in savings.

The CBO estimate said the Boehner bill would save about $850
billion not the $1 trillion that Boehner said is needed to pass a debt
ceiling increase of that same size.

Boehner has been proposing a two-step debt ceiling increase that
would raise the debt ceiling by $1 trillion this year and $1.6 trillion
next year.

Under Boehner’s approach, passing the initial $1 trillion debt
ceiling increase would require Congress to pass $1.2 trillion in
spending cuts through imposing caps on discretionary spending.

Approval of the second tranche of $1.6 trillion would require
passage of $1.8 trillion in spending cuts in entitlement programs that
are identified by a special congressional panel.

Under Boehner’s plan, the House and Senate would also have to vote
on a balanced budget constitutional amendment between this October and
the end of the year.

The CBO score was an embarrassing blow to Boehner’s hope to pass a
debt hike bill quickly through the House. If he goes forward with the
House vote this week, it would likely be Thursday or Friday, almost on
the eve of the Aug. 2 deadline.

However the CBO score may not be the worst of Boehner’s troubles. A
number of conservative House Republicans have said they won’t support
the bill because they do not think it is strong enough.

And the White House issued a veto threat regarding Boehner’s bill
Tuesday afternoon.

Boehner’s manifold challenges and struggles may have been the
impetus for Senate Minority Leader Mitch McConnell’s surprising
recommendation Tuesday for Congress to “re-engage” with the President
Obama to find a solution to the debt ceiling impasses.

Over the weekend, both Boehner and McConnell said it made little
sense to continue negotiating with the president and said the
negotiations should shift to Capitol Hill.

As congressional Republicans struggle, Senate Majority Leader Harry
Reid has introduced his debt hike plan in the Senate, but has carefully
avoided scheduling a vote. He is waiting to see what happens to
Boehner’s plan in the House.

Reid has proposed a bill that would cut spending by $2.7 trillion
over ten years and allow for passage by Aug. 2 of a $2.4 trillion debt
ceiling increase.

Reid’s plan calls for $1.2 trillion in discretionary savings, $1
trillion from winding down the wars in Iraq and Afghanistan, $400
billion in interest savings and $100 billion in entitlement savings.

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

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

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