One Week Before Debt Ceiling Expiration, New Options for Compromise Emerge - July 26, 2011

Negotiations for a “grand bargain” on deficit reduction fell apart on Friday, July 22, leaving President Obama and Speaker of the House John Boehner (R-Ohio) searching for a “Plan B.” With the debt ceiling expiration only eight days away, Republican and Democratic congressional leadership are now working on separate plans to raise the debt ceiling and avoid default. Currently, proposals from Senate Majority Leader Harry Reid (D-Nev.) and Speaker Boehner are being crafted, with each chamber seeking to pass its own legislation this week. While the end game remains unclear, either of these two avenues may ultimately lead to the bipartisan consensus necessary to enact legislation. Speaker Boehner’s two-step plan would raise the debt ceiling, without raising taxes, by almost $2.5 trillion. Boehner’s proposal raises the debt ceiling in two installments: the first installment would be an increase of $900 billion to $1 trillion coupled with strict discretionary spending caps designed to achieve savings of $1.2 trillion over 10 years and the second installment (occurring sometime in CY 2012) would be an increase of up to $1.6 trillion, contingent on achieving $1.8 trillion in savings from entitlement programs. Sen. Reid has unveiled a package that would immediately increase the debt ceiling by $2.7 trillion – enough to fund expenses through 2013. His proposal would not include any cuts to Medicare, Medicaid and Social Security, or any tax increases. NAPH encourages member hospitals to weigh-in with their congressional delegations regarding the importance of protecting Medicaid. As developments unfold on a nearly hourly basis, look to your inbox and www.naph.org for updates from NAPH.