We now have a CBO report on Harry Reid’s plan, and what once again sticks out is the extreme similarities with John Boehner’s. Remember that the Boehner plan had discretionary spending caps, a “Super Congress” committee to recommend deficit reduction, spending on program integrity for several programs, increases in Pell grants offset by student loan changes, and other budget process changes. Here’s the summary by CBO of the Reid plan:
Establish caps on discretionary spending through 2021, including separate caps on new funding for war-related activities;
Allow for certain amounts of additional spending for “program integrity” initiatives aimed at reducing the amount of improper benefit payments and enhancing compliance with tax laws;
Extend and expand authority to auction licenses for part of the electromagnetic spectrum;
Make changes to the Pell Grant and student loan programs;
Reduce certain payments to agricultural producers;
Increase the debt limit by $2.7 trillion;
Reinstate and modify certain budget process rules, and
Create a joint Congressional committee for further deficit reduction.
So that’s pretty much the same. The differences are:
• The budget cap for Afghanistan and Iraq spending, of $50 billion a year, gets you a little over $1 trillion.
• Reid expands the program integrity spending to cover the IRS. Boehner lopped that off, because the last thing we need is people paying their required taxes.
• Other mandatory spending changes. CBO scores the spectrum sale and the reduction in Ag subsidies. They don’t cover one of the items on the Reid plan fact sheet, the incredibly vague $30 billion from “savings to Fannie Mae and Freddie Mac.” But everything else is there. And the Ag reductions were clearly agreed to in the Biden talks, while the government already planned on the spectrum sale.
And now you see why Jack Lew doesn’t want the March baseline to be used. CBO scores this as a $2.2 trillion reduction in the defecit over the adjusted March baseline. Working off what was in the Boehner package, that would mean around $2.4-$2.5 trillion off the January baseline, which was the standard for negotiations. That’s a significant difference. And it shows that Reid’s plan missed the mark by about the same amount as Boehner’s – remember that Reid wanted $2.7 trillion in deficit reduction.
The discretionary spending caps are the same in both documents. Nobody spells out the spending cuts, leaving it up to the appropriators to work under the limit. The Reid Catfood Commission would have “a goal of reducing the deficit to 3 percent of gross domestic product or less,” according to CBO. So they would have a somewhat defined target, although not a dollar amount like Boehner’s.
The fact that the Boehner and Reid plans are so similar, including the Pell grant spending and everything else, means that they were basically negotiated together, as something the White House would accept. Reid threw in a few more bells and whistles, scored the war savings, and increases the debt limit all at once. Boehner uses a second tranche of the debt limit to force through any Catfood Commission II changes.
The White House is talking about blending all the plans on the table if they fail, “combining elements of the Boehner and Reid proposals and another from Sen. Mitch McConnell (R-KY) so each can claim a measure of victory.” They’re already blended! It’s just a matter of when the debt limit is increased, and who can declare victory.
UPDATE: First Read writes that a short-term extension, by about 10 days or so, is looking more and more likely.