House GOP Introduces Cut, Cap and Balance Act; McConnell, Reid Work on Plan B - July 19, 2011

As the clock ticks closer to the expiration of the debt ceiling, Senate and House leaders continue to work on a compromise. In the House, Republicans have introduced H.R. 2560 – the Cut, Cap and Balance Act of 2011. This bill would not allow for an increase in the debt ceiling until these conditions are met: (1) current spending is cut by around $100 billion, (2) future discretionary and mandatory spending is capped at a percentage of the gross domestic product and (3) Congress must approve a Constitutional amendment that would require the federal government to balance its budget. The Cut, Cap and Balance Act of 2011 is slated for a vote in the House on July 19. President Obama has made it clear that he would veto this bill if it were to pass both chambers – which is unlikely given the Democratic-controlled Senate. This bill is seen as mainly symbolic, as Republicans in the House continue to advocate deep spending cuts and reforms to the budget process.

In the Senate, Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) are working together on a back-up plan in case a compromise cannot be reached in the coming week. Based on Sen. McConnell’s proposal discussed last week, this “plan b” legislation would allow President Obama to raise the debt ceiling while requiring him to offer spending cuts that Congress can enact. It is still unclear how the legislation that Sens. Reid and McConnell are drafting would work and exactly what the requirements would be for the President and Congress in this scenario.

In order to pass legislation before the debt ceiling expiration, a compromise will most likely have to be made this week to allow enough time for the legislative process. NAPH will continue to monitor developments on Capitol Hill as Congress and the Administration work toward a compromise and passage of legislation before the debt ceiling expires.