Explaining The McConnell Plan
No, I’m not going to try to do it myself, I am going to pass that baton to Stanford Business and Law School lecturer and former Bush Administration Director of the National Economic Council, Keith Hennessey (who knows a lot more about economics than I do):
How it would work
- Before August recess, the House and Senate would pass the McConnell proposal and the President would sign it into law.
- As soon as it became law, the President could ask Congress to increase the debt limit by $700 B.
- The President would have to simultaneously submit a plan to cut spending by more than $700 B.
- The Presidential request and submission would trigger an immediate $100 B increase in the debt limit, thus giving the Administration the ability to make it into September without having to slow down cash outlays for benefit checks or anything else.
- The President’s $700 B debt limit increase request would be automatically approved unless Congress blocked it. To block it, a majority of the House and Senate would vote to disapprove. That resolution of disapproval would go to the President, who would presumably veto it. If more than 2/3 of the House and Senate overrode the President’s veto, then the $700 B request would be denied and the original $100 B authorization rescinded. This resolution of disapproval would be governed by “fast track” legislative procedures so it couldn’t be delayed, amended, or filibustered.
- If either the House or Senate voted down the resolution of disapproval, or if 1/3 or more of the House or the Senate sustained a Presidential veto, then the $700 B would be automatically authorized. In other words, the President knows he will get his $700 B as long as (a) he submits his spending cuts and (b) he knows he can get 1/3 of the House or the Senate to sustain his veto, should it be necessary.
- This process would be repeated in the fall of 2011 and again in the summer of 2012, with the President authorized to ask for an additional $900 B each time, again matched by a greater amount of spending cuts. The President could begin this process only when Treasury was within $100 B of the debt limit.
- The authority would expire in early 2013, around the end of this Presidential term.
Now, that last item is really important. This is not a permanent change, it’s a temporary fix, and it’s very finely crafted to put Obama on the hot seat rather than sitting on the sidelines. Again, Hennessey explains:
This is a time-limited proposal with a specific partisan configuration in mind. All $2.5 T of debt limit increases would technically be the result of Presidential action, not Congressional action. This may explain why Democratic leaders are saying nice things about McConnell’s idea – it lets their Members off the hook just as it lets Republicans off the hook. President Obama would politically “own” the debt limit increases.
In addition, it would require (with a caveat) the President to make specific legislative proposals to cut spending deeply (note that McConnell requires “spending cuts,” rather than “deficit reduction”), something he has so far been unwilling to do. The President and his team assert that his spring budget speech and his recent closed-door negotiations constitute specific and credible proposals, while Republicans (including me) argue he has been vague and has been claiming credit for more deficit reduction than he has actually proposed. The McConnell amendment would force the President to propose spending cuts to get his debt limit increase, creating a more level playing field in an environment in which House Republicans have voted for specific pain while everyone else has basically ducked. At the same time, it’s difficult to limit the President’s ability to propose gimmicks and call them spending cuts.
The economy is weak and President Obama is taking the brunt of the blame for that. I think Leader McConnell is concerned that if the debt limit is not increased, the President will attempt to assign responsibility for that Congressional inaction and any subsequent economic bad news to Republicans. He could argue that Republicans’ irresponsibility on the debt limit is the cause of economic weakness. The McConnell proposal would preclude this scenario.
And at the end, he offers this bit of wisdom:
Key to understanding the McConnell proposal is the current legislative context. Leader McConnell emphasizes that he intends this proposal as a backup plan, to be pursued only if everything else fails. Congressional Democrats are reportedly open to the idea, which means it has at least a moderate chance of becoming law. This means that, at the moment, it is the only plan that can make that claim. The question is not, then, whether or not you like the proposal. Instead, I think the relevant questions are:
- Are you willing to allow the Congress to recess for August without the debt limit being increased?
- If not, what other alternative can become law?
Those conservatives who answer the first question yes will probably be unsatisfied by any proposal, I think. If you are not afraid of the effects (policy or political) of Congressional inaction, you have no incentive to consider any compromise.
The other obvious alternative, assuming there is no big deal, would be to package a small, short-term debt limit increase with a similarly-sized package of spending cuts (say, $200-$300 B). I won’t be surprised if that idea starts to gain traction soon as an alternative to McConnell’s proposal
Read the whole thing… really. He gets down into the nuts and bolts of the proposal in plain non-economist English, and it really doesn’t look all that bad, given the sorry state that the Obamacrats’ spending spree has gotten this nation into.