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Mitch McConnell Debt Ceiling Plan


Posted: Jul 13, 2011

Mitch McConnell Debt Ceiling Plan: Senate GOP Leader Offers Alternative To Obama's 'Grand Bargain'

WASHINGTON -- Senate Minority Leader Mitch McConnell (R-Ky.) floated a novel way out of default Tuesday, suggesting that Congress give up its power to raise the debt ceiling, and instead effectively transfer that authority -- and the political pain that comes with it -- to the White House for the remainder of Obama's current term. With eight days until the administration-imposed deadline to reach a deal, Senate Majority Leader Harry Reid (D-Nev.) told reporters he had no plans to "trash" McConnell's plan and would give it a close look.

Under current law, Congress raises the debt ceiling, which allows the Treasury Department to issue more bonds to pay off debts and fund projects that Congress has already authorized. Raising the debt ceiling does not authorize or appropriate new spending, but merely settles old bills.

Under McConnell's plan, which he called his "last-choice option," the White House would request an increase in the debt ceiling and Congress could only block that request with a veto-proof super majority -- effectively ceding control over the debt limit to the White House. A super majority would likely be difficult to amass, especially when neither party's leadership genuinely wants the nation to default.

McConnell said he believes the votes exist in the Senate to pass a bill that would establish such a debt-ceiling regime. If House Democrats went along, fewer than 25 Republican House votes would be needed to make the bill law. How congressional leadership could marshal those votes, however, remains a mystery.

The novelty of McConnell's plan made those on Capitol Hill more pessimistic, moving genuine fears of default from the fringe to closer to center stage.

"This is not my first choice," McConnell said at a press conference Tuesday."I had hoped all year long that the opportunity presented by his request to raise the debt ceiling would generate a bipartisan agreement that would begin to get our house in order reducing spending."

"That may still happen, I still hope it will," he added, "but we're certainly not going to send a message to the markets and to the American people that default is an option."

The bill would require the president to recommend spending cuts -- without revenue-raisers -- in the same amounts of a debt ceiling increase request, although actually passing the cuts would not be necessary to raise the debt limit.

"It gives the president 100 percent of the responsibility for increasing the debt limit," Sen. Lamar Alexander (R-Tenn.) told reporters after the press conference.

The debt limit would be increased three times during Obama's term: First, by $700 billion over the next few weeks, then $900 billion in the fall and another $900 billion in the spring, McConnell said.

But the bill doesn't guarantee that spending cuts will happen, McConnell said.

"We have become increasingly pessimistic that we will be able to reach an agreement with the only person in America who can sign something into law, and that's the president," he said.

McConnell said he has "spoken about it with others," but would not comment on whether House Speaker John Boehner (R-Ohio) is open to the idea. A spokesman for Boehner did not immediately respond to request for comment.

Reid said he had received a call from McConnell about the plan.

"[McConnell] has a proposal that some of you have looked over," Reid said. "He'll explain that to you. I'm not about to trash his proposal. It's something that I will look at."

"It sounds like the ultimate punt," said one senior Senate Democratic aide.

Senate Republicans have been largely uninvolved in the debt limit negotiations so far. It has been expected that the House floor would be the battleground, and a bipartisan coalition of senators loyal to their respective leaderships will push through whatever the House sends across the Capitol.

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Then will have a government shut-down like we have here in - Minnesota

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Our governor wants to raise taxes on the wealthiest and so does Obama... why are they being held hostage is my question? Can't the wealthiest just pay their "fair share" in proportion to the rest of us... sickening

Are you talking about the poor who will lose their assistance? - or are you saying the wealthy are hostage?

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heritage - PauletteRevereMT

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Good to hear from the both the HuffPo and Heritage Foundation. Now, here's what Heritage has to say: http://blog.heritage.org/2011/07/12/senantor-mitch-mcconnells-debt-ceiling-plan/


 



Senator Mitch McConnell’s Insufficient Debt Ceiling Plan





Earlier today, Senate Minority Leader Mitch McConnell floated a proposal that, essentially, cedes the authority for raising the debt limit from the Congress to the president.


Under McConnell’s plan, President Obama would propose three incremental debt limit increases between now and the end of 2012.  Congress could only vote to disapprove these requests, which President Obama could then veto. Without a 2/3 majority in Congress to override that veto, which is very unlikely, the debt limit increase would become automatic.


This plan is insufficient and is obviously a non-starter. At a time of record deficits and an ever-worsening economy, it would be the height of irresponsibility to raise the federal debt ceiling $2.5 trillion without at the same time implementing sweeping systemic reforms that would restore our nation’s economy.


First, this plan effectively eliminates Congress’ authority and responsibility for the federal budget.  We won’t know if real cuts will even exist, rather than the smoke and mirrors Americans have been suckered by in the past.


It’s obvious the President’s has very liberal spending priorities, meaning defense would be cut while Obamacare and stimulus projects continued to be fully funded.


But the plan is also based on small hopes for future cuts in spending, with no hope for systemic reform and virtually guarantees $2.5 trillion will be added to our federal deficit.


Regardless, this proposal raises several serious constitutional concerns.  Depending on exactly how the legislative language is drafted, it well might violate the Bicameralism and Presentment Clauses for the making of law, the separation of powers regarding Congress’s control over the budget and spending, the legislative Recommendations Clause, and it might also be struck down as an attempt to grant the President the equivalent of a line-item veto.  It is also unclear whether the unconstitutional portion would be struck down by the courts and severed from the rest of the statute (which would eliminate Congress’s ability to veto the cuts) or if the entire scheme would be struck down.  But, at a minimum, the proposal is highly dubious as a matter of constitutional law.


The American people sent this Congress to Washington last November with a mandate to get government under control, not do their best to place blame for its insolvency. We cannot kick this problem down the road, and we cannot spend time developing escape hatches rather than solutions.


The only bipartisan agreement in Washington right now is that the debt ceiling cannot be raised without real and tangible spending cuts. Let’s not retreat from that important position.


We understand that the plan, by design, puts the onus on liberals in Washington to finally propose some way to address out of control spending. They have not passed a budget in more than 800 days.  Unfortunately  political maneuvering in a time of such high stakes is not sufficient.


Republican still serving the Wall Street Gods - Look at the stock market today.

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So much for their high-minded sanctimonious philosophy about the debt ceiling.

wall street - anon

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It's not just the Wall Street Gods, it's all of us "little people" who own a 401K, IRA or other plan. I can thank the Republicans because my retirement plan isn't in the tank?

Oh, I hope you sold high and bought low - or did you just sit on it

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while the hedge funders made money both up and down and got taxed at 15%.

Yeah, right.
wall street - anon
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I have money taken out of my check every week to fund my current 401K. I have a few other IRAs from previous employers that I have rolled over throughout the years. I guess I don't understand what you were insuinating in your post. ??
Grasshopper, you have much to learn - if you ever want anything out of that 401-K
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you must learn the ways of Wall Street. A rumor goes out whether it is from the Republican politicians, the Wall Street Journal, or whatever. The market can easily be driven down or up because there are a million people who buy or sell at the wrong time based on some newstory. Your funds most likely dropped 10 to 15% between April and May. Many people, including Eric Cantor, were planning on various stocks or bonds to drop. They invested in "short" funds, probably cashed in at the bottom, started another rumor about the debt ceiling and made a bunch of money again yesterday. The hedge fund guys know how to play the game and only pay 15% tax on their gains playing with your money. In the mean time, your fund lost value, and may have gained some of it back yesterday, but it will probably rinse and repeat a few more times before the debt ceiling "issue" goes away. The Lehman Brothers/Bush financial fiasco cost you a huge amount, as did the "fat finger technical" error on the NasDaq about a year ago. The little guy needs the financial reform to make the markets fair, but with the Republicans holding the purse strings, that will never happen.
Here is an article on Eric Cantor's investments - sm
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http://www.salon.com/news/politics/war_room/2011/06/27/eric_cantor_conflict_of_interest
yep - ctmt
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Thanks anyway, but I know it works. I've done pretty well over the 35 years I've invested, but I appreciate your concern. The markets have never been "fair" and never will be. There will never ever be reform that balances the playing field. Don't fool yourself-It doesn't matter WHO is in power, Dems or Repubs, they are all looking out for their own interests, as am I. In fact, it would be quite naive to think that only Repubs are looking out for their WS buddies. Things look differently when you learn that 99.5% of our politicians are corrupt.


Here are a just 4 of Obama's BFFs, but there are many more. Just look around. The "scratch my back, I'll scratch yours" is on both sides of the aisle.


Paul Tudor Jones, Tudor Investment Corp


Wall Street domain: Hedge funds

Who is he: He is the founder of $15 billion Tudor Investment Corporation. He began his career trading cotton futures for broker Eli Tullis. He also worked at E.F. Hutton with Glenn Dubin.


Love for Obama: PTJ hosted a 500-guest fundraiser for Obama in 2007 at his Greenwich mansion.


Marc Lasry, Avenue Capital




Wall Street domain: Hedge funds


Who is he: He's the co-founder and CEO of Avenue Capital Group. He's a billionaire.


Love for Obama: Last year Lastry hosted a fundraiser for Obama in New York. He also said earlier this year: "I'm still a huge supporter. When you really break it down, he has actually done a pretty good job."


Eric Mindich, Eton Park



Wall Street domain: Hedge funds


Who is he: He's the founder of Eton Park Capital Management. He formed the hedge fund after 15 years with Goldman Sachs


Love for the Dems: Mindich has donated hundreds of thousands of dollars to the Dems over the last decade. Last year alone Mindich donated $89,600 to Democrats including Harry Reid, Chris Dodd and Sen. Kirsten Gillibrand of New York.


Jes Staley, JP Morgan


Wall Street Domain: Investment banking

Who is he: He's the head of of JP Morgan's Investment Bank.


Love for the Democrats: He donated thousands of dollars to Schumer, Gillibrand and Lincoln last year.





ABC News ran a segment on the 401K danger now - guess they didn't know about
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the bone the Pubs threw the market today. Oh well, they will take it away tomorrow.

I think this is a good idea - sm

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Not only will it force the president to actually put forth a plan of his own for once...but he will take the fall and be held responsible for the outcome. There is no compromising with this president. I will be so glad when his term is up. Truly amazed at how many people still follow this man blindly.

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