Get ready, folks. Word in Washington is that a bipartisan consensus may be forming around a proposal put forth by the Senate's infamous "Gang of 6." President Obama has hailed the group's proposal and as of now, it may be the most plausible blueprint for a compromise by the debt ceiling deadline on August 2. But what would this plan mean for the country?
As American Spectator's Joseph Lawlor points out, the Gang of 6 plan is a far cry from Republicans' favored "Cut, Cap & Balance" and may be more appealing for politicians facing reelection in 2012:
The plan would only cut about $500 billion immediately, and most of that would be spending already agreed to by all sides: discretionary spending caps, a federal worker pay freeze, and a (gradual) shift to the chained CPI to calculate retirement benefits.
The measure would also "require" committees to come up with longer-term measures that would bring the total amount of deficit reduction to $3.6 trillion over 10 years. In other words, the bill would force committees to figure out how to trim entitlements (without fundamentally reforming them), simplify the tax code by eliminating preferences and loopholes and lowering rates, and lower other spending.
The plan is intended to increase revenues both by leading to higher economic growth and by cutting tax preferences and loopholes more than tax rates. However, because repeal of the alternative minimum tax is included, according to the authors, "if CBO scored this plan, it would find net tax relief of approximately $1.5 trillion."
There are a number of mixed reviews on the proposal, including speculation that it amounts to a $3 trillion tax hike -- Yikes!