Democrats Cave, Unveil Debt Ceiling Plan GOP 'Can't Refuse'

The Democrats made the first move in the debt ceiling game today by unveiling their plan to end the congressional impasse and end the threat of government shutdown and debt default that has beset the U.S. legislature for months. At a news conference in Washington, Sen. Chuck Schumer, D-N.Y., joined by Senate Majority Leader Harry Reid, D-Nev., revealed the Democrats plan that abandoned President Barack Obama's call for revenue increases to be included in a bipartisan plan.

But even though the Senate proposal appears to cave to Republican demands, it also does the one thing that polls have shown Americans want -- protection for Social Security, Medicare and entitlement programs.

"This is an offer that Republicans can't refuse," Schumer told reporters, according to CBS News.

But is it? Republicans have refused to talk about tax increases anything that re-establishes taxes protected by the George W. Bush tax breaks, tax loopholes and various subsidies anyway, so leaving them out of the new proposal only seems to give conservatives what they want. Republicans also continue to propose massive restructuring plans for entitlement programs (not to mention the elimination of some), deeper budgetary cuts, and want a balanced budget amendment.

Since the tax increases (or revenue re-establishers, if one prefers) were never part of the bargaining for Republicans to begin with, the Senate debt ceiling plan will undoubtedly look like a cave to GOP demands by their constituents.

But at least they found a way to protect the social safety net programs for the disabled, the elderly, the young, and the poor. Within the $2.7 trillion in spending cuts were reductions in housing programs and agriculture subsidies and savings made through winding down the wars in Afghanistan and Iraq. The cuts would add another $400 billion in savings through interest savings.

Recent polls have indicated Americans want Congress to compromise -- using spending cuts and revenue increases -- on the budget deficit and debt ceiling talks, but they would rather that social safety net programs like Social Security and Medicare remain undisturbed.

Schumer noted the plan did not deal with entitlement restructuring and revenue increases, noting that the issues were set aside in order to forestall the looming federal government shutdown and credit default, the deadline for which is Aug. 2.

"If they refuse this offer, it simply means they want a default, for any reason," asserted Schumer.

The plan pre-empted the House GOP plan, which is scheduled for unveiling later on Monday. It is a two-part plan that contains a conditional raise to the debt ceiling, but first would grant a less than a trillion-dollar limit lift to get the U.S. through to the end of the year.

The proposal would set up a commission made up of both chambers of Congress to propose further budgetary savings. Contingent upon the passage of those proposed savings, President Obama could then request another $1.6 trillion debt limit increase.

Democrats were quick to attack the GOP plan, calling it a waste of time, because, just like the last Republican House plan, a purely symbolic "cut, cap, and balance" bill, it would have no chance of passage. Calling the plan another "dodge" (the former measure was nicknamed the "duck, dodge, and dismantle" plan), Schumer asked, "Does anyone think it would be a good idea to do this all over again in six months?"

Politicians on both sides of the debt ceiling fight know that a contingency plan would have the two parties warring over the budget in the midst of hundreds of state elections, not to mention the presidential election itself. Making the debt limit increase would bring the budget and the national debt center stage, potentially making the elections about fiscal spending and little else.

The White House was quick to embrace the Democratic proposal, if only because it would end the impasse and would extend the debt limit through to the end of 2012.

But Schumer and the Democrats could be correct. The proposal could be a face-saving plan for all sides, especially the GOP, who are viewed by most Americans as being too intransigent in the debt ceiling talks. The Republicans get spending cuts without tax increases and do not appear out to destroy Medicare and Social Security.

Although they appear to cave on revenue increases, the Democrats save the entitlement programs while slashing government expenditures. Both sides look a little better than not as the government shutdown and potential default is avoided. The bonus: Both parties continue to fight, using the debt ceiling issue throughout 2012 to hammer each others' positions in the myriad elections that are forthcoming, gearing up for a year-ending post-election confrontation.