US House Passes Republican ‘Cut, Cap, And Balance’ Budget Plan

Author: Market News International | Category: News

–House Approves GOP Package On Mostly Party Line Vote, 234 to 190
–Senate Expected To Take Up GOP Plan Later In Week; Fate is Grim
–President Obama Says He Will Veto House GOP Plan If Reaches His Desk

By John Shaw

WASHINGTON (MNI) – In a vote that is widely seen as a symbolic
expression of House Republican fiscal aspirations, the House Tuesday
evening passed a budget package assembled by conservative Republicans
who claim it would lead to $6 trillion in budget savings.

The House passed the GOP’s so-called “Cut, Cap and Balance” bill on
a 234 to 190 vote. All Republicans but 7 voted for the bill. All
Democrats except for five voted against it.

The bill would cap annual federal spending at 19.9% of gross
domestic product by 2021, limit discretionary spending for fiscal year
2012 at $1.019 trillion, and allow for a $2.4 trillion increase in the
debt ceiling after the House and Senate pass a balanced budget
constitutional amendment.

House Speaker John Boehner said this fiscal approach is “balanced”
and should it be supported by President Obama. The White House already
released a statement saying Obama would veto the bill if it reached his
desk.

The bill now goes to the Senate where it is likely to be voted on
in the next several days. Senate Democratic leaders said they are
confident it will not pass the Senate.

The Senate is also expected to vote on a balanced budget
constitutional amendment this week.

Even as these votes in the House and Senate are being cast, Obama
is expected to continue to explore a deficit reduction and debt ceiling
package with congressional leaders.

The current focus of the talks is on a plan that Senate Minority
Leader Mitch McConnell unveiled last week.

McConnell’s plan that would allow the debt ceiling to be increased
in three tranches of $700 billion, $900 billion and $900 billion over
the next year.

To get these increases in the debt ceiling, the president would
have to introduce spending cut packages of the same size — and
Democrats would have to defeat Republican motions to disapprove of the
debt hike.

McConnell’s plan has sparked more interest from the White House and
congressional Democrats than Republicans, but Boehner has not ruled out
taking up some version of the McConnell plan.

McConnell is working with Senate Majority Leader Harry Reid on
revisions to his package. These might include attaching up to $1.5
trillion in spending cuts to the plan as well as creating a new
congressional panel that would be charged to submit a deficit reduction
plan later in the year that would be voted on by the House and Senate.

A new twist to the fiscal debate occurred Tuesday with the release
of a budget by the so-called “Gang of Six.”

The “Gang Of Six” plan was developed by three Democratic and three
Republican senators and would cut deficits by $3.75 trillion over a
decade. Their plan would include large savings from entitlement programs
and increase revenues by about $1.2 trillion.

Obama said Tuesday that the “Gang of Six” budget is “broadly
consistent” with the fiscal approach he supports.

Reid and McConnell both said they are reviewing the plan, but both
have been very cool to the workings of this informal group of senators

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

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