If you believe in a) free enterprise and b) fiscal solvency, would the emerging Harry Reid proposal to raise  the debt ceiling and cut debt be so terrible an outcome? First some general deets:

House Speaker John A. Boehner, Ohio Republican, pitched his colleagues on a plan to raise the borrowing limit by about $1 trillion and match that with similar sized spending cuts — enough to last through the rest of the year, and leaving for later the heavy lifting on taxes and bigger spending items.

Meanwhile, Senate Majority Leader Harry Reid said he is working on a plan to raise the debt limit by $2.7 trillion, coupled with an equal reduction in projected future spending. In a concession to Republicans, he said that plan would not include tax increases, but that the new debt level would last through the 2012 elections.

On the surface at least, this would seem to meet the baseline demands that Boehner and Majority Leader Eric Cantor expressed in their conference call with House GOP members on Sunday. Here is Cantor:

The only way to overcome [Obama] is to remain united and insist that every dollar the debt limit is increased, we have equal or more dollars in spending cuts without ANY tax hikes.

Well, the Reid plan would seemingly cut $2.7 trillion, a few hundred billion more than the debt limit increase. And no new taxes. Republicans will gripe about the quality of those spending cut, of course. And they should. Perhaps $1 trillion — maybe more — would come from no longer assuming perpetual war in Iraq and Afghanistan. But House Rs already passed a budget with the same accounting change, which may make it hard to savage the idea.

In forecasting future spending, CBO feels bound to project the cost of wars forward, even when they already show signs of winding down. Thus, in its March baseline, the CBO assumes $1.67 trillion in war funding through 2021; since the administration forecasts only $630 billion, budget writers can credit themselves with more than $1 trillion in added savings. … House Budget Committee Chairman Paul Ryan of Wisconsin counted the savings to show a larger deficit reduction than he otherwise could have. The whole scoring of the White House “grand bargain” also rested on large war savings.

The rest of the cuts would come from discretionary spending (maybe $1.2 trillion), non-healthcare mandatory spending ($300 billion), and interest savings. And maybe tack on some sort of new debt commission to help keep the credit raters at bay.

All and all, not a bad day’s work for a party that only controls one chamber of Congress and faced a White House that wanted a clean debt limit hike in April. (Though I would like a closer look at those discretionary cuts.)

After that, make the 2012 elections about the size and scope of government — and how to pay for it. Will it happen? Wouldn’t surprise me a bit. And, after all, markets won’t stay calm forever.