WASHINGTON -- Senate Majority Leader Harry Reid's (D-Nev.) $2.7 trillion debt ceiling proposal will not include reforms to the benefit structure of entitlement programs, several Democratic sources confirmed on Monday.
The plan, which is being crafted as a last-minute attempt to break through the political impasse on a deficit reduction package, would instead lean heavily on cuts to discretionary spending. The package will also reportedly include roughly $1 trillion in savings that will come from the drawdown of the wars in Iraq and Afghanistan (which the Congressional Budget Office does score). Reid's office was notably hesitant to confirm that detail, cautioning reporters to wait until the final package is unveiled. That said, if entitlement programs remain more or less untouched in the plan, there would be few other areas from which to draw ten-year savings.
Word that Reid is taking entitlements off the table will come as welcome news to Democrats who are still smarting from the idea that the party has gone from demanding a "clean" debt ceiling bill to willingly backing $2.7 trillion in cuts without measures to increase revenue. The Obama administration had offered to support an increase in Medicare's eligibility age, the means-testing of certain Medicare programs, cuts to Medicaid benefits and a restructuring of the payments of Social Security benefits as part of a grand bargain with Republicans. GOP leadership ultimately rejected that proposal over complaints that the president was insistent that additional tax revenues be added to the mix to round out the plan.
A top Democratic aide confirmed on Monday that none of those specific entitlement reforms will be included in the party's most current debt-ceiling proposal. As for cuts to Medicaid or Medicare providers -- namely hospitals and pharmaceutical companies -- that remains less clear. According to House Majority Leader Eric Cantor's (R-Va.) office, both parties agreed to $334 to $353 billion in health savings during talks organized by Vice President Joseph Biden. Those talks, which never resulted in a formal agreement, do serve as one pillar of the $2.7 trillion proposal that Reid has put forward. But one Democratic source, who has been plugged into negotiations, says that Medicaid, at the very least, will not be touched under the Reid plan.
In addition to the policy specifics, there remain questions about the politics of the proposal: namely, can Reid's package of cuts pass through Congress? As the Nevada Democrat constructs his plan, House Speaker John Boehner (R-Ohio) is charting a decidedly different path, one that would require two votes and the creation of a powerful deficit reduction committee to suggest future entitlement reform. While Democrats have insisted that they will oppose any measure that did not get the debt ceiling raised through the 2012 elections, Republicans have responded by saying that Reid is giving Obama a "blank check" to raise the debt ceiling.
He's not, of course. The cuts that the Majority Leader is proposing as a condition for raising the debt ceiling are real and they will, strategically, be drawn from Republican suggestions -- specifically the budget proposed by House Budget Committee Chair Paul Ryan (R-Wis.).
"The package will include only cuts that Republicans have previously agreed to," said the aide. "It is a similar tact to the short term [continuing resolution], when they jammed us with cuts that we similarly agreed to which made it hard for us to oppose.... All the cuts are cuts they supported in the past, that they either offered in the Biden negotiations or that were picked from Paul Ryan's budget."
One feature of Ryan's budget, for what it's worth, was the $1 trillion in savings that would come from the drawdown of the wars in Iraq and Afghanistan.
Debt Ceiling Debate Comes Down To Iraq, Afghanistan Drawdown
WASHINGTON -- In the end, the debt ceiling debate could come down to a simple accounting question. Should the money saved from drawing down the wars in Iraq and Afghanistan count as part of a deficit reduction package?
Senate Majority Leader Harry Reid (D-Nev.) has put together a proposal, designed to break through the congressional impasse, that counts $1 trillion in savings from the Overseas Contingency Operations (OCO) fund -- the veritable piggy bank for wars abroad. His logic is straightforward.
"It's legitimate savings," said Adam Jentleson, a spokesperson for Reid. It's true that the United States will be spending significantly less money on the wars in ten years than it is today. The Congressional Budget Office, which judges future expenditures against their current levels, will "score" the savings regardless, as an Obama administration official noted several weeks ago when the OCO issue first surfaced. Why not count them as part of the current plan?
More importantly, as Jentleson notes, when Republicans were putting together their latest plan for deficit reduction, they counted the OCO savings as well. Indeed, in his budget plan that passed the House earlier this year, Rep. Paul Ryan (R-Wis.) tallied an estimated $1.04 trillion in savings from the OCO based on Congressional Budget Office estimates. When his Republican colleagues, including Speaker John Boehner (R-Ohio) repeatedly touted the $5.8 trillion in savings that the Ryan plan achieved, they did not offer rhetorical footnotes about how a good chunk didn't count because it came from pre-existing policy.
When The Huffington Post raised the issue several weeks ago, House Majority Leader Eric Cantor's (R-Va.) office drew a distinction, saying that while everyone agrees that the drawdown of troops will provide savings over time, lawmakers would be hard-pressed to call it a "cut."
"We have never counted OCO as a reduction, especially since it is happening anyway and has nothing to do with this debt deal," Cantor spokesman Brad Dayspring said at the time.
Independent budget analysts concur with this point.
http://www.huffingtonpost.com/2011/07/25/debt-ceiling-debate-troop-drawdown_n_909097.html
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