'Gang of Six' revives hope for big deal in stalled debt-ceiling talks

President Obama's hopes for a 'grand bargain' both to raise the debt ceiling and rein in the deficit got a boost Tuesday when the Senate's 'Gang of Six' proposed $3.7 trillion in deficit reductions.

The Senate’s bipartisan "Gang of Six" is back with a new framework for significant deficit reduction, and President Obama is pleased.

Speaking at the top of Tuesday’s regular White House briefing, the president called the senators' framework “broadly consistent” with his “balanced approach” of using both spending cuts and increased revenues to achieve major deficit reduction and thus secure congressional approval for raising the national debt ceiling. After Aug. 2, the government runs out of borrowing authority, and thus risks a potentially calamitous default.

The plan, whose details the White House was still studying, would reportedly cut $3.7 trillion from the federal budget over 10 years.

Mr. Obama called the proposal “a very significant step,” saying it reflects an acknowledgment by Democratic senators that entitlement programs are part of the problem and by Republican senators that revenues have to be part of the mix.

“So here’s where we stand,” Obama said. “We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts, modifications to Social Security, Medicaid, and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component."

The new plan came from the six senators who have been working on and off for months to find spending cuts and revenue increases that could win bipartisan support. They are Republican Sens. Tom Coburn of Oklahoma, Saxby Chambliss of Georgia, and Mike Crapo of Idaho and Democratic Sens. Richard Durbin of Illinois, Kent Conrad of North Dakota, and Mark Warner of Virginia.

The Gang of Six effort eclipsed a planned vote this evening in the Republican-controlled House on a plan called “cut, cap, and balance.” The plan would cut and cap federal spending, and require congressional passage of a balanced budget amendment to the Constitution as a prerequisite to a higher debt ceiling. Obama has said he would veto such a measure, though the Senate isn’t expected to pass it, and thus chances were slim it would reach the Oval Office.

Obama said the new Gang of Six plan “would not match perfectly with some of the approaches we’ve taken, but I think that we’re in the same playing field.”

He expressed hope for renewed negotiation over the next couple of days to resolve the matter. The White House has indicated that agreement is needed by Friday to give Congress enough time to pass legislation.

Obama also indicated that a backup plan in the works by the two Senate leaders – minority leader Mitch McConnell (R) of Kentucky and majority leader Harry Reid (D) of Nevada – remains necessary.

“In the event that we don’t get an agreement, at minimum, we’ve got to raise the debt ceiling,” he said.

The McConnell-Reid plan would defer authority to raise the debt ceiling to the president in three increments. Discussions are still being held over what level of spending cuts to attach to those increases in borrowing authority.

In the regular briefing that followed Obama’s appearance, White House spokesman Jay Carney said bipartisan compromise is the name of the game – and that the public wants it.

“That's the approach the president's taken,” Mr. Carney said, “not because he wants to win political points but because he wants to get a deal that the American people can support.”

At a Monitor breakfast earlier on Tuesday, the editor in chief of Gallup, Frank Newport, noted that a majority of Americans want Washington leaders to compromise as they work out a deal on the debt limit.