On July 19, 2011, the five remaining U.S. Senators of the “Gang of Six” presented a new deficit reduction plan to about half of the members of the U.S. Senate. The plan appears to have sparked some excitement and bipartisan enthusiasm that a deal to couple a deficit reduction plan with an increase in the debt ceiling could be worked out by the August 2 deadline. Even the stock market cheered the possibility, with the Dow jumping over 200 points. Senator Kent Conrad (D-ND) announced that the group’s plan would cut $3.7 trillion from the federal deficit over the next ten years. In general, the plan will trim entitlements and other spending programs and raise more than $1 trillion in new revenues by reforming the tax code. The Gang of Five touts the $1 trillion of additional revenue raised from changes to the tax code as being a tax cut rather than a tax increase because the revenue would result from lowering tax rates, shrinking deductions and eliminating the Alternative Minimum Tax (AMT).
The “Gang of Five” became the “Gang of Six” again as Senator Tom Coburn (R-OK) rejoined the group by throwing his support behind the plan. Senator Coburn had left the Gang of Six in May of this year after the group could not reach agreement to reform spending for entitlements such as Medicare and Social Security. One day prior to the Gang of Five announcing their plan, Senator Coburn released his own $9 trillion deficit reduction plan in a report he titled “Back in Black.” Coburn’s 614-page report was the result of a critical review conducted on spending and duplication in thousands of federal programs. A summary of the savings projected in Coburn’s report by governmental agency can be found at: http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=ac3f0d39-1cc2-4bac-b170-42fc20111974
It was reported that Senator Conrad reacted to Coburn’s report by saying that the Oklahoma Republican’s cuts were more draconian than necessary to balance the budget.
Although the Gang of Six’s plan seemed to spark a great deal of bipartisan support, Senator Harry Reid (D-Nev) seemed to put a damper on the plan, saying that he doubted whether the plan could be scored by the Congressional Budget Office and passed before the August 2 deadline. Also, Senator Max Baucus (D-Mont), the Chairman of the Senate Finance Committee, was reportedly not enthusiastic about the plan, saying that to accomplish the tax reform within the six-month period provided for in the plan would involve “a lot of practical and procedural difficulties.” (In Washington, this means, “Gosh, we might have to work five days a week and maybe some weekends to get this done.”)
Thus, the U.S. debt stalemate continues.
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