–Senate Majority Leader: Senate Won’t Pass Boehner Debt Hike Plan
–Rating Agencies Would Downgrade US If House GOP Plan Passes
–Wants Senate To Vote ‘Soon’ On His Plan

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid Tuesday said
Republican reaction to his new deficit reduction and debt limit plan
raises far-reaching questions about whether the GOP is even interested
in reaching an agreement on the debt ceiling.

In comments on the Senate floor, Reid said debt limit negotiations
have been complicated by the “multiple personalities” in the Republican
party and the rise of the implacable Tea Party wing of the GOP.

Reid said his plan to cut spending by $2.7 trillion over ten years
and allow for passage of a $2.4 trillion debt ceiling increase is based
on Republican proposals.

“It’s everything the Republicans have demanded wrapped up in a bow
and delivered to their door,” Reid said.

“Every single spending cut in the proposal has already been
endorsed by Republicans,” he charged.

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.

Of the $100 billion in entitlement savings, $40 billion comes from
program management reforms, $30 billion from Fannie Mae and Freddie Mac
reforms, $15 billion in spectrum sales, and between $10 and $15 billion
in agriculture reforms.

Reid said the plan being pushed by House Speaker John Boehner can’t
pass the Senate, adding that even if it did, it would lead to the
downgrading of the U.S.’s debt.

Reid said it is wrong to pass a short-term debt ceiling increase
because it would cause the nation to “relive the endless partisan
wrangling again six months from now.”

The Senate will debate Reid’s plan Tuesday and could vote as early
as Wednesday. Reid said he wants the Senate vote to occur “soon.” The
House is expected to vote on Boehner’s plan Wednesday.

Boehner’s plan would raise the debt ceiling by $1 trillion this
year and $1.6 trillion next year. 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.

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 U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Timothy 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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