Meet the New Debt-Ceiling Plan

They're calling the newest deficit deal Plan B. It's more like Plan F.

First you had the president's deficit commission, which failed to acheive a super-majority last December. Then you had the Gang of Six in January, which became the Gang of Five in May. You had Paul Ryan's deficit plan in April, before the president presented his own plan, before the vice-president led his own caucus toward the brink of compromise. In between, you've had more than two dozen ten-year, multi-trillion dollar debt proposals, from think tanks, commissions, and politicians.

What have the various plans wrought? A debt ceiling stalemate at the precipice of default and a tentative plan to cut a trillion dollars while creating yet another commission to produce yet another deficit reduction plan by the end of this year. Here's how the latest plan would work:

Under McConnell's original plan, The Washington Post's Alec MacGillis and Lori Montgomery report, "Congress would allow Obama to raise the debt ceiling in three increments totalling $2.5 trillion over the next year. Each time, Congress would vote on a resolution of disapproval, allowing Republicans to blame the increases on Obama." But many lawmakers were unhappy that the Plan B wouldn't cut the deficit. So Reid is working with McConnell to bring in between $1 trillion and $1.5 trillion in spending cuts hammered out in the Biden-led negotiations, The Hill's Alexander Bolton reports.

What would those cuts be? Keith Hennessey explains that about $230 billion would come in cuts to health spending--mostly by slowing the rate of Medicare and Medicaid spending growth in payments to health care providers, plus about $8 billion that would affect patients, like "a smidge more means-testing or higher copays." Another $220 billion in cuts to mandatory spending would include higher fees, like on the price of using a part of the broadcast spectrum or property sales. Then about $1 trillion comes from discretionary spending cuts. All saving come over a decade.
Read the full story at The Atlantic Wire.


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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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