Today's Coming Crisis Movie

Monday, May 9, 2011

Boehner demands not billions, but trillions in cuts as US Debt ceiling rapidly approaches -- an impossible deal?

Speaker John Boehner will call on Congress to offset a debt ceiling hike with spending cuts of a greater amount, an ambitious proposal that puts House Republicans on a collision course with Democrats who want much more modest spending restrictions attached to the vote.

“Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase,” Boehner plans to tell the Economic Club of New York here this evening, according to remarks obtained by POLITICO. “And the cuts should be greater than the accompanying increase in debt authority the president is given. We should be talking about cuts of trillions, not just billions.”

Under Boehner’s vision, for example, Republicans would have to find more than $2 trillion in cuts if they wanted to raise the debt ceiling by that amount through 2012 — which is in line with Treasury’s estimates on the debt limit. But Republicans could also go for a more incremental increase in the debt ceiling, coupling that with a smaller offsetting cut in spending. Boehner’s preference is for immediate cuts, not promises to pare back spending in the future.

But by mentioning “trillions” in long term cuts, Boehner is clearly putting entitlement reform in play — including Medicare — since it would be near impossible to cut trillions without affecting entitlement spending.

Boehner will say that “everything is on the table … that includes honest conversations about how best to preserve Medicare, because we all know, with millions of Baby Boomers beginning to retire, the status quo is unsustainable. If we don’t act boldly now, the markets will act for us very soon.” (read more)