Senate Majority Leader Harry Reid has signed off on a deal to raise the debt ceiling and cut $2.8 trillion from the federal budget over the next ten years.
After meeting with House Democratic Leader Nancy Pelosi (Calif.) for over an hour and a half on Sunday, Reid and other Senate Democratic leaders must now sell the deal to their caucus.
“Senator Reid has signed off on the debt-ceiling agreement pending caucus approval,” said Adam Jentleson, a spokesman for Reid.
Sources familiar with the outlines of the deal say it would raise the debt limit by about $2.7 trillion and reduce the deficit by the same amount in two steps. It would cut about $1 trillion in spending up front and set up a select bicameral committee to put together a future deficit-reduction package worth $1.7 trillion to $1.8 trillion.
Failure of Congress to pass the future deficit-reduction package would automatically trigger cuts to defense spending and Medicare. An aide familiar with the deal said the Medicare cut would not affect beneficiaries. Instead, healthcare providers and insurance companies would see lower payments.
Reid says he wants to bring a completed deal to the floor of the senate later this evening.
No doubt House Republicans will want to look very closely at the trigger mechanism that would come into play if the bi-partisan, bi-cameral Super Committee can’t come to an agreement on the additional $1.8 trillion in spending cuts. And there is an open question as to whether Congress will be in much of a mood to trim spending that would affect favored constituencies of both parties less than a year before national election.
In fact, the history of such “triggers” is that they are honored in the breach.
Hoagland said this particular trigger may not be effective in reducing the nation’s debt because discretionary spending covers only roughly 18 percent of the federal budget.
“The real problem remains the health-care entitlement programs and the revenue side,” he said.
The 1990 agreement also featured a pay-as-you-go requirement for mandatory programs and revenues. A trigger was enacted to enforce the caps and the “paygo” requirement.
Still, Congress overrode the enforcement provision two out of the three times it was triggered, according to an April 28 report by the Peterson-Pew Commission on Budget Reform.
And in 1985, the Balanced Budget and Emergency Deficit Control, or the Gramm-Rudman-Hollings Act, included a trigger to enforce deficit targets. If the year’s target wasn’t met, spending cuts were triggered. In the five years of the act, the triggers kicked in twice, one of which was reduced by Congress and the other overridden by a subsequent budget agreement.
Congress has also rejected scheduled automatic reductions in doctors’ Medicare pay rates established in the Balanced Budget Act of 1997, prompting the annual passage of additional spending that is so routine it has a nickname: the “Doc Fix.”
“Anything Congress does, Congress can undo,” said Bob Bixby, executive director of the Concord Coalition. Ain’t it the truth.