Harry Reid's latest proposal meets the Republicans' demands -- and they'll still ask for more
From the outset of the debt-ceiling fight, House Republicans have made two clear demands: any agreement to raise the debt limit must include offsetting cuts of at least $2.4 trillion and could not include any revenue increases. For a time, it appeared that some grand bargain to reform the tax code and entitlement programs might obviate these demands. But those talks fell apart. Democrats first pushed for a deal that would include roughly 3 to 1 spending cuts to revenue increases. Then 4 to 1. And then, last night, Senate Majority Leader Harry Reid threw in the towel and announced he'll introduce a bill with at least $2.7 trillion in cuts and no revenue increases at all. That's a clear win for Republicans, although they're certain to ask for more.
Last week, I predicted that the final deal would be $1.5-$2 trillion in cuts, no revenue and a stern lecture from President Obama. That was based on my belief that Republicans would not yield on taxes, and Democrats, unwilling to risk the economic damage from a default, would meekly agree to the cuts devised during the Biden negotiations. Such a deal wouldn't quite have met the Republican demand for $2.4 trillion--but I figured Republicans would not choose default over $1.5 trillion in cuts and no new taxes. In hindsight, I underestimated the Democrats' willingness to keep making concessions (in fairness, their capacity to do so seems practically limitless).