Two cheers for Boehner’s two-step plan

July 26, 2011

Now is not time to let the perfect be the enemy of the good. Neither the Reid budget plan nor the Boehner budget plan packs the fiscal wallop of Cut, Cap and Balance. But significant progress on cutting debt can still be made before the Aug. 2 (or is it Aug. 8 or 10 or …) debt ceiling deadline. And by that measure, the Boehner plan is not only far better than the Reid plan, it is a pretty darn good plan in and of itself. While both plans would cut some $1.2 trillion in discretionary spending over a decade, Reid would then close up shop until 2013. The only other major cuts would be to future defense spending that no one really expects to happen.

I can’t believe S&P and Moody’s would find the Reid plan a compelling reason to keep the U.S. debt rating at AAA. While it is better than not cutting spending at all — as President Obama originally intended — and doesn’t raise taxes, Americans should expect and demand more from Washington.

Boehner, on the other hand, would keep the debt cutting process going and more likely result in substantive spending cuts of $3 trillion, nearly three times the Reid plan. (And if you tack on the Reid defense cuts, you suddenly have a $4 trillion plan, including interest savings. The raters would like that.) I don’t think spending hawks should fear the Boehner debt commission if it has real teeth and doesn’t create a trigger for higher taxes.

But wouldn’t financial markets be upset by the continued uncertainty of having to address the debt limit issue again in a matter of months? Goldman Sachs doesn’t sound particularly alarmed in a new report:

A short-term increase, with another shot at deficit reduction later this year? A two-stage process continues to look like the most likely agreement, since it is very difficult to generate savings of the magnitude being discussed without developing more complex policy reforms in a number of areas, including health programs and potentially tax policy, and those would take time.

And after that, both parties can use the upcoming election season to make their respective cases to the American public for sweeping entitlement and tax reform. I think Boehner’s plan will pass the House and become the core of the budget bill that actually gets signed by Obama. And the sooner, the better.

 

2 comments

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[...] the analysis by James Pethokoukoukis (via @irishspy): Now is not time to let the perfect be the enemy of the good. Neither the Reid [...]

[...] alternative.  Reuters gives more information on both plans here.  An opinion piece on Reuters provides some analysis and argues that with respect to getting the debt under control, “the Boehner plan is not only far better than the Reid plan, it is a pretty darn good plan [...]

“Now is not time to let the perfect be the enemy of the good”

doesn’t reduce the debt, so what’s to celebrate?

our own Doom?

it’s not a win unless it fixes something, this bill fixes nothing!

Posted by Shoey77 | Report as abusive

[...] Two cheers for Boehner’s Two-step plan, by James Pethokoukis, Reuters [...]

[...] Dan is telling conservatives to get behind this Boehner plan, saying he agrees with Pethokoukis that it’s a pretty darn good plan. I respect them both, but they are [...]

[...] agrees, as apparently does the Chamber of Commerce. Meanwhile, Fred Thompson, Yuval Levin, and James Pethokoukis argue that Boehner’s plan isn’t half bad under these awfully unfavorable circumstances. [...]

Now suddenly, you like the Bohner plan? What a suprise? Wow, you mean you support the Republican plan. I’m shocked. What a thoughtful commentary. However it too late. The House will get neither the Boehner or the Reid plan through. That is what happens when you support people whose best talking point is, “I raised a family so I know how to control a budget” I guess participants in the International bond markets are the same as getting a 12 year old to do their homework. No James, it’s too late for that. And even if it did it would never get through the Senate, and once again you are wrong saying the president would sign it. He and the Democrats have given up everything. He may have the most idiotic political and economic advisors in history, but even they can figure that out. Do really think he is going let go of his one last requirement? I guess we will see. I wish I was more secure in my convictions.

Posted by robscheerger | Report as abusive

[...] But the Boehner Plan still looks like the likeliest path through the debt ceiling crisis. And it is a more fiscally responsible option than the Reid Plan. [...]

[...] Two cheers for Boehner’s two-step plan By James Pethokoukis – Reuters.com Now is not time to let the perfect be the enemy of the good. Neither the Reid budget plan nor the Boehner budget plan packs the fiscal wallop of Cut, Cap and Balance. But significant progress on cutting debt can still be made before the Aug. 2 (or is it Aug. 8 or 10 or …) debt ceiling deadline. And by that measure, the Boehner plan is not only far better than the Reid plan, it is a pretty darn good plan in and of itself. While both plans would cut some $1.2 trillion in discretionary spending over a decade, Reid would then close up shop until 2013. The only other major cuts would be to future defense spending that no one really expects to happen. [...]