Despite President Obama's optimistic words, an eleventh-hour breakthrough in deficit negotiations using the so-called "Gang of Six" plan doesn't seem to have a chance.
The plan, which was resurrected after being discarded earlier in the year, includes an overhaul of the tax code, lower entitlement spending, lower spending on defense and education, and brand new taxes to increase the tax base.
Conservative Republicans have already said they would not vote for any bill that includes tax increases, and many Democrats will not stand for cuts to Social Security and Medicare. Is it realistic to think that such massive legislative changes can be agreed upon in the next couple of weeks?
Moreover, the plan would need to be drafted, studied, and analyzed by the Congressional Budget Office - hurdles that Senator Max Baucus called "practical, procedural difficulties" - before it could be voted on. Therefore, even if politicians were to unanimously agree on the plan, it doesn't seem like there is enough time before the August 2 drop-dead date for raising the debt ceiling.
A much more likely resolution to the debt ceiling crisis is the McConnell plan, which is being viewed as a "backup plan" for now. The plan is best described below in a CNN.com articlepublished this week:
"McConnell's fallback proposal would give Obama the power to raise the borrowing limit by a total of $2.5 trillion, but also require three congressional votes on the issue before the 2012 general election. Specifically, Obama would be required to submit three requests for debt ceiling hikes — a $700 billion increase and two $900 billion increases. Along with each request, the president would have to submit a list of recommended spending cuts exceeding the debt ceiling increase. The cuts would not need to be enacted in order for the ceiling to rise. Congress would vote on — and presumably pass — "resolutions of disapproval" for each request. Obama would likely veto each resolution. Unless Congress manages to override the president's vetoes — considered highly unlikely -- the debt ceiling would increase. The unusual scheme would allow most Republicans and some more conservative Democrats to vote against any debt ceiling hike while still allowing it to clear."
The McConnell plan would not represent an agreement or a compromise, but rather a loophole in the system. This loophole would allow the President to raise the debt ceiling unilaterally, without a vote from Congress. Furthermore, the raising of the debt ceiling through the McConnell plan would not resolve our budgetary problems. S&P and Moody's would still be breathing down our necks to address our deficits, and bond vigilantes would be emboldened by yet another failure by the US government to address its profligate spending.