Why House conservatives are offering fresh plan on federal debt

Reeling from the reaction to Rep. Paul Ryan's proposal to reform Medicare, an influential group of House Republicans offers an alternative plan to lock in spending and rein in the federal debt.

With Rep. Paul Ryan's ambitious budget plan faltering and hopes for a bipartisan deal waning, Republicans are launching a third front in their bid to remake the culture of spending in Washington.

A new proposal forwarded by the House's influential Republican Study Committee (RSC) Monday makes no changes to entitlements like Medicare to balance the budget. Instead, it seeks to lock in total spending at certain levels through immediate cuts, followed by longer term spending caps and a balanced budget amendment to the Constitution.

The proposal shows the urgency motivating many Republicans, who say America is heading toward a federal debt crisis of Greek proportions. With Democrats fearful that the House Republicans will refuse to raise the federal debt limit by Aug. 2 without major spending reforms, conservatives sense a rare moment of opportunity, and the RSC's plan is a fresh attempt to seize it.

In their letter to Speaker John Boehner (R) of Ohio and majority leader Eric Cantor (R) of Virginia, the 103 members of the RSC cast the federal debt crisis in stark terms. “The Democrats have given up, saying that the only answer to excessive borrowing is more borrowing,” they wrote.

At current rates of spending, the interest paid on the national debt will triple over the next decade, consuming all tax revenues by the middle of this century, they said. Unless spending is significantly cut, “the government will in essence default on its debt by ‘picking the pocket of savers,’ ” they added, quoting William Gross, cofounder of PIMCO, an investment management company that last month sold off all of its US government debt holdings.

The RSC plan would cut spending for 2012 by $380 billion and establish enforceable spending caps that would limit total federal spending to 18 percent of gross domestic product. The balanced budget amendment would lock in the curbs with constitutional authority.

In a separate move, the House Oversight and Government Reform Committee on Monday called for reducing the size of the federal workforce by 10 percent by 2015. With 400,000 federal employees currently eligible for retirement, “We cannot let this opportunity to save taxpayer money pass,” said Rep. Dennis Ross (R) of Florida, who chairs the subcommittee on the federal workforce, postal service, and labor policy, in a statement.

The measure, expected to save taxpayers $128 billion during the next 10 years, allows the federal government to hire only one employee to replace every three that retire.

While Vice President Joe Biden is leading ongoing, bipartisan negotiations over raising the federal debt limit, there appears to be little expectation of and early compromise between House Republicans and Senate Democrats. The disconnect between the two bodies is so marked that leaders no longer schedule recesses at the same time. Counting this week, when the Senate returns and the House leaves town, the two bodies have been in session at the same time only one of the past three weeks.

With Democrats opposing entitlement cuts and Republicans opposing tax hikes, “that means that there’s not a lot left to do a deal with the debt,” says Michael Franc, vice president for government affairs at the Heritage Foundation, a conservative think tank. “The two sides have locked into positions that don’t augur very well for a big deal. So what the RSC is doing is describing what the right wall of the debate looks like.”

Senate Democrats, who face defending 23 seats in the 2012 campaign, are not proposing their own budget for 2012 on the grounds that a bipartisan solution may be forthcoming from Biden talks. But Senate majority leader Harry Reid (D) of Nevada says that entitlements will not be on the table.

And other Democrats have said that the budget debate should be separate from the vote about the federal debt ceiling. Sens. Tom Harkin (D) of Iowa and Jack Reed (D) of Rhode Island are calling for a bipartisan vote to raise the debt limit without conditions. To risk default is irresponsible, they said in a teleconference call Friday.

In the Bush era, “I would say offhand that 90-plus percent of Democrats … believed that we should change the tax structure and end a lot of the tax breaks to the wealthiest in this country, but we didn’t hold up raising the debt ceiling,” said Senator Harkin.