Cut, Cap and Balance: The Most Radical GOP Plan Will Get a Vote

Republicans want to restrict spending and amend the Constitution

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The White House is using a dramatic budget plan that comes to the House floor on Tuesday to attack Republicans as purveyors of reckless fiscal policy, even as Washington insiders argue that the vote will ease pressures within the Republican conference and bring Congress that much closer to a deal to lift the debt ceiling.

In essence, the most divisive budget proposal to come to a vote this year may also be the first step to compromise.

The bill, known as Cut, Cap and Balance --or in the White House's derisive talking points, "duck, dodge and dismantle"--would enact the spending cuts found in the House Republican budget, and constrain fiscal decision-makers by linking an increase in the debt ceiling to a balanced budget amendment that goes even further, capping spending at 18 percent of GDP--the U.S. last spent less than that in 1966--and ensuring that tax increases require a 2/3 supermajority in Congress.

If enacted, the legislation would require massive changes in government programs, including cuts in health care spending and Social Security, and for Republicans, is a step further away from budget compromise talks even as the Treasury Department is set to run out of borrowing authority in just over two weeks.

The White House, which has made hay in the past by tarring Republicans with a plan seen as out of the mainstream, threatened to veto the proposal and sent senior officials to brief reporters. "This is more than just a vote in Congress, this is becoming one of the core elements of the Republican Party's economic philosophy," Communications Director Dan Pfeiffer said.

Jason Furman, the deputy director of the National Economic Council, called the proposal "extreme, radical, [and] unprecedented."

The legislation is supported by many key Republicans, including House Majority Leader Eric Cantor (R-Va.) and leading presidential contender Mitt Romney. All told, some 39 Republican senators endorsed the plan, and 87 House members.

Yet despite Republican enthusiasm, it is not expected to succeed in the Democratic-controlled Senate. The proposal is almost designed to fail--it is further to the right of the House GOP budget, which was defeated in the Senate.

Rather than mimicking the language of a balanced budget amendment that almost passed Congress in the 1990s with bipartisan support, it adds additional restrictions that have even fiscally conservative Democrats like Minority Whip Steny Hoyer (D-Md.) in opposition.

Republican strategists say that the vote will give members political room to support a future compromise agreement that won't be as sweeping and spending-cut focused as they prefer. A chance to vote on a key priority of the party's base will make it easier to accept a smaller deal down the road.

"They need to let their right show what is pure before they are in a position to compromise," a Republican lobbyist told National Journal. "Same with a Senate vote, which may barely crack 40 votes."

At the same time, the confrontational rhetoric found in the debate over the bill is likely to worry financial markets, which are watching Washington for signs of deal. The Obama administration has indicated that an agreement should be in place by Friday to ensure the borrowing limit is raised well before Treasury exhausts its reserves on August 2.

Image credit: Molly Riley/Reuters

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Tim Fernholz is a reporter at Quartz.

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