Home  »  Economy  »  It’s Gotta Be Bad: Obama Endorses Gang Of Six Debt Plan As “Good News”

Jul 19, 2011 8 Comments ›› Pat Dollard

The Hill:

President Obama on Tuesday hailed as “good news” a deficit-reduction package unveiled by the Senate’s Gang of Six.

Obama, making his third appearance in eight days in the White House briefing room, appeared to endorse the plan that would reduce the deficit by $3.7 trillion over the next decade and eliminate $1 million in tax loopholes.

He said the group of six senators had come up with a proposal that the president said is “broadly consistent with the approach I’ve urged.”

He also said the back-up plan being put together by Senate Majority Leader Harry Reid (D-Nev.) and Senate GOP leader Mitch McConnell (Ky.) “continues to be a necessary approach to put forward” to ensure that the U.S. does not default if a broader deal fails to come together.
Obama warned that time is running out, and that here, in the “11th hour,” Democratic and Republican leaders on Wednesday should be “prepared to start talking turkey.”

The president acknowledged that the economy and Wall Street have thus far acted as though Washington will get a deal, but he warned that it will not last.

“So far at least, the markets have shown confidence that the leaders in Washington aren’t going to send the economy over a cliff,” Obama said.

But if a deal fails to materialize, the president said, the markets, the American people and world will “start reacting adversely fairly quickly.”

The president said that there is no time left for “symbolic gestures” or posturing.

The president dismissed the Cut, Cap and Balance measure backed by House Republicans that will come up for a floor vote on Tuesday, “but I understand the need for them to test that proposition.”

Obama on Monday threatened to veto the measure, which is dead on arrival in the Democratic-controlled Senate.

Obama also said he will call House Speaker John Boehner (R-Ohio) and arrange for more meetings at the White House.

Politico:

President Barack Obama said Tuesday that a proposal offered by Republican and Democratic senators is “a very significant step” that represents “the potential for bipartisan consensus” on resolving the impasse over cutting the deficit and raising the debt ceiling.

In an appearance in the White House briefing room, Obama urged congressional leaders to embrace the “Gang of Six” proposal, which would slash the deficit by $3.7 trillion over 10 years, in part by raising about $1 trillion in new revenue.

“We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts, modifications to Social Security, Medicaid and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component,” Obama said. “We now have a bipartisan group of senators who agree with that balanced approach. And we’ve got the American people who agree with that balanced approach.”

Obama’s decision to align himself with the Senate package aims to further marginalize House Republicans, who have resisted any deficit reduction plan that includes new revenues.

But the Gang of Six proposal and the praise from the president come late in the process, with only 12 days remaining until Congress must raise the debt limit.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) were never thrilled about the Gang of Six deliberations. And early reaction from the House GOP, the linchpin to any deal, wasn’t promising.

The House leadership staff was reviewing the plan but had already expressed some concerns, aides said. They need more details on how the proposal achieves $3.7 trillion in savings, and want more significant changes to Medicare and Medicare, the aides said.

And already, there were efforts to brand the plan as containing tax increases — a label that could kill the proposal in the House — even though the group claims its plan would result in a $1.5 trillion net tax decrease by repealing the alternative minimum tax and lowering tax rates.

“I would have a problem with a trillion dollars in new revenue,” Ways and Means Chairman David Camp (R-Mich.) said Tuesday.

But Camp didn’t entirely rule out the proposal, saying “I don’t want to give it the back of my hand before I get a chance to read it.”

Obama said he is still open to the fallback plan proposed by McConnell to allow the president to raise the debt ceiling as a “failsafe” if a broader deal can’t be reached.

“Our attitude is that that continues to be a necessary approach to put forward, in the event that we don’t get an agreement, at minimum we’ve got to raise the debt ceiling,” Obama said. “That’s the bare minimum that has to be achieved, but we continue to believe that we can achieve more.”

The House is set to vote Tuesday afternoon on “Cut, Cap and Balance,” a plan that gets strong support among conservative Republicans but is opposed by Democrats and is seen as unable to pass the Senate.

After the votes, Obama said he will call Boehner and other congressional leaders back to the White House for the first formal talks since Thursday.

“Hopefully, we’ll be able to report on some additional progress over the next few days,” Obama said.
He said Congress and the White House are now in “the 11th hour and we don’t have a lot more time left.”

“It’s very important in these next couple days to understand we don’t have any more time to engage in symbolic gestures, we don’t have any more time to posture,” he said.

In all, Obama said, the Gang of Six plan amounts to “an approach in which there is shared sacrifice and everybody is giving up something.”

The plan is, he said, “broadly consistent with the approach that I’ve urged: what it says is we’ve got to be serious about reducing discretionary spending, both in domestic spending and defense, we’ve got to be serious about tackling health care spending, and entitlements in a serious way, and we’ve got to have some additional revenue.”

Jon Allen and Jake Sherman contributed to this report.