[Posted by Karl]
The CBO score for Sen. Maj. Ldr. Harry Reid’s debt-reduction plan comes short of its advertised spending cuts. Indeed, overall, it fell further short than House Speaker Boehner’s plan (which is being rewritten, whereas I would bet Reid’s won’t be). But for all of the media narratives about the GOP in disarray, I suspect the House will end up backing Boehner for lack of a politically viable alternative, even in the House. Moreover, in terms of approach, it is the basis for a deal with the Senate. As Douglas Holtz-Eakin notes:
The plans are quite similar. Indeed, the best way to think about the Reid plan is that it is simply the Boehner plan with fake cuts (largely war spending) added on. Put differently, executing the Reid plan is the same as executing the Boehner plan and then adding an unrestricted debt limit increase on at the end. Since so-called “clean” increases are a signal to markets that the U.S. cannot address its fundamental problems, this is extremely dangerous and undesirable.
The other major difference is that Reid wants to kick the next debt ceiling hike past the 2012 election. Moreover, Holtz-Eakin is a bit out of line on the potential for the Boehner plan to spawn tax increases:
[T]here is not a single dime in taxes. David Addington at the Heritage Foundation has argued that the Boehner plan “greases the way for tax hikes.” This is truly unhinged. The Boehner plan envisions a “select committee” of six Republicans and six Democrats that would require a majority vote — that is, seven votes — to propose entitlement reforms for an up-or-down vote in Congress. The six Republicans (and any Democrats who are not renting their brain from an amoeba) can easily stop any notion of tax increases. And there is simply zero chance that the House would pass such an increase if it did emerge over the next six months.
How Holtz-Eakin could dismiss this concern, mere days after the bipartisan Gang of Six proposed roughly $2 trillion in tax hikes, remains anyone’s guess. This is not to say that defusing the debt bomb won’t ultimately require new “revenue.” However, successful fiscal consolidatons have a much higher ratio of real spending cuts to tax hikes than anything the Democrats have ever offered. Moreover, the right remembers how past compromises have traded tax hikes for imaginary future spending cuts. The historical context explains why the lack of current spending cuts is a sticking point for the right, no matter how much the establishment try to bury that history. It is true that the House GOP would likely reject any recommended tax hikes, but the Dems and the media would surely use them (as they tried with the Gang of Six) to try to split the GOP and paint the right as extreme.