There have been many speculated and failed plans.
- At the beginning of the process, a bipartisan Vice-President Biden lead group came up with a plan that included $1.7 trillion dollars in spending cuts and a $2.4 trillion dollar raising of the debt limit, that was shunned by the House because it didn’t meet their dollar for dollar requirement.
- A Grand Deal proposed by Obama in his bipartisan budget talks cut spending by $3 trillion and raises an additional $1 trillion in revenue for a reduction of $4 trillion. But this compromise too was shot down because it required raising taxes.
- Senate Minority Leader Mitch McConnell proposed a plan to fundamentally change the process of raising the debt ceiling, giving the President the power to raise the debt ceiling, issuing the proposal that the legislature could then vote down.
The President would be able to veto their objection and raise the debt ceiling anyways. Most Republicans don’t like this idea because #1 it’s strictly a political move and #2 it gives more power to the President.
- The House Republicans passed the Cut, Cap and Balance Act which makes substantial cuts to social security, Medicare, creates a constitutional amendment that requires that the Federal Government pass a balanced budget, and a requirement that any increase in taxes must contain a 2/3rds majority in both houses (essentially no new taxes).
Senate Democrats (and any sane rational person with an understanding of governance) voted against this bill.
- Another Super Congress plan has been suggested, creating a bipartisan 12 person legislative body made up of members of the Senate and House (3 House Republicans, 3 House Democrats, 3 Senate Republicans, 3 Senate Democrats) that can create and fast track legislation of cuts to entitlement programs and tax increases.
- Now that talks between the two sides have broken down House Republicans and Senate Democrats are creating their own plans. Harry Reid’s compromise raises the debt ceiling $2.7 trillion dollars while cutting spending by the same amount without touching Medicare and Social Security and containing no new revenue increases (mainly through draw-downs in Iraq and Afghanistan).
- Speaker Boehner is trying to rally support for a two step plan to cut $3 trillion in spending very similar to Reid’s plan but Boehner demands to hold another vote next year to further expand governmental borrowing authority.
- And there is a fringe option proposed that the debt ceiling as a whole is unconstitutional due to a provision in the 14th Amendment which states “The Federal Debt shall not be questioned” (In response to Confederates rejoining the Union, questioning the massive debts the Union obtained through the war), and that Obama should just blow off the ceiling and order the Treasury Secretary to continue to borrow money in order to fulfill the obligations Congress has already mandated.
It’ll be interesting to see if August 2nd arrives without Obama considering this option, right now the White House isn’t showing it’s hand in whether it’s considering the option.
Stay Tuned for Part IV