Oops: Boehner Says Gang Of Six Proposal "Appears To Fall Short"

Tyler Durden's picture

No, the soap opera is not done just yet. According to The Hill the office of John Boehner has said that the Gang of Six proposed $3.7 trillion fluff "settlement" appears to fall short of goals set by House Republicans. "This plan shares many similarities with the framework the Speaker discussed with the president, but also appears to fall short in some important areas. The House is voting today on our 'cut, cap, and balance' plan, and we hope the Senate will take it up soon. That remains our focus,” a Boehner spokesman said. As expected the kicker is the impact on Social Security which will see drastic changes if Chained CPI is implemented in conjunction with cost of living adjustments: "They also are wary of the plan's complicated mechanism for dealing with Social Security. The plan states that Social Security reform only be taken up once the rest of deficit-reduction plan is completed. If Social Security reform is not passed by a 60-vote margin, the earlier vote on the rest of the deficit-reduction package is nullified." The actual impact on COLA was not mentioned by Boehner's office. We expect the AARP will require clarification on the speaker's stance on that issue shortly.

More from The Hill:

In talks with President Obama, Boehner has been pushing for larger cuts to Medicare and Medicaid than are laid out in the Gang's plan, which claims unspecified healthcare savings of $202 billion.

The GOP also wants more up-front savings, and deeper tax cuts than the Gang's plan contains, sources said. By eliminating the Alternative Minimum Tax and lowering tax rates, the Gang of Six claims its plan scores as a $1.5 trillion tax cut even though it eliminates tax loopholes.

According to sources, House Republicans are also worried the Gang's plan doesn't have sufficient triggers to force action on the deficit and could allow committees to stall.

Which probably means that the McConnell fall back plan is still the defacto Plan B. The issue is that as Moody's said earlier, this will likely not be sufficient to dent the US leverage position much, and downgrades to America's credit rating could still be forthcoming.

As usual, D.C. seems willing to wait until the 11th hour to find a resolution, which we continue to be confident will be one which has no change to the general bearing of the US spending pattern, which match every dollar in revenue with more than one dollar in new debt, and will result in a debt/GDP ratio of at least 120% one year from today.

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Nolsgrad's picture

If you close your eyes the nasty debt/GDP ratios can't hurt you

Dr. Porkchop's picture

aaahh.. my eyes! ze goggles do nussing!

GetZeeGold's picture


Zee goggles are used to hold the blood shooting out of your eyes.


dwdollar's picture

Did I miss something? Are the algos front-running a miracle? After today, I'm wondering if Moses, Jesus, Mohammad, and Buddha are planning to descend from heaven by the end of the week.

TBT or not TBT's picture

Aquaman will provide liquidity. No need to bring in the Team Dogma.

Tijuana Donkey Show's picture

Aquaman liquidity? Isn't that a new mutual fund from Goldman?

mayhem_korner's picture

Excellent avatar!  Ass with attitude.

espirit's picture

Short Boner?

Sorry, but everytime I read his name it comes out Boner instead of Baa-ner.

tom a taxpayer's picture

The Gang of Six are the Six Blind Men who cannot see the elephant deficit.


WestVillageIdiot's picture

It's not that they can't see.  It's just that they don't care.

Quintus's picture

So.....I guess all those 'Investors' who sold gold down $20 earlier today on the wonderful news that Obama had found the holy grail of debt ceiling reconciliation and therefore all was right in the world will buy it back now?  

No.  Thought not.  Not until after the Options Expiry is behind us next week.  Funny how that happens.  

WestVillageIdiot's picture

Let's see, in the past 3 years we've now had about 6 stock market rallies based upon the debt ceiling, 39 based upon some sort of Greece settlement adn 113 based upon housing in one form or another.  And yet all 3 of these topics continue to be complete disasters.  It all makes sense to me. 

Cdad's picture

Someone please explain today's very curious 30 year bond action...on this "gang of six" catalyst.  


Another day of Kabuki theatre in the market as the nation burns....more political betrayal...more computerized Wall Street nonsense.

Good grief [and by that I mean f*ck me]

FinalCollapse's picture

Austerity --> Deflation --> Bonds

GetZeeGold's picture


We took a vote. Since you weren't around....we voted you.


Quinvarius's picture

Care to explain how austerity reduces the money supply?  When you pay principal and interest on a debt, doesn't someone else get that money?

Aside from that, a bad economy means no tax revenue.  No tax revenue means no money to pay interest or principal on the debt.  Default means our worthless paper money has no demand to pay back debt that used to back it.  Or we can just print and not default.  Really.  There is no situation that leads to "deflation".  Again, you need to use the word correctly and not as they do on TV.


Tuco Benedicto Pacifico Juan Maria Ramirez's picture

How about the unraveling of $1,500,000,000,000,000 in derivatives overnight!?  LTCM X 1000

Now there is a black swan that would block the sun, son!


Tuco Benedicto Pacifico Juan Maria Ramirez

FinalCollapse's picture

Thanks - you hit on the right button, and there are many more. Most people think that we have closed system, and it is a zero-sum game. No it isn't. This would be M1, but we have M2, and M3.

When they finally start deleveraging, you will hear big sucking sound of disappearing money: the Ponzi dollars. M1 is only small fraction of the overall money supply. It is the M3 that will and should decrease.

Everything in this country is being done on credit. If you deleverage, the money supply will go down.



Ponzi Unit's picture

Every dollar represents a dollar of debt. Pay down the debt, reduce the money supply. 

snowball777's picture

Sweet Jesus someone with a clue. We thought you'd gone extinct.

karzai_luver's picture

You can't do a betrayal when at least 60% of the public wants a deal

that protects their "special" interest.



FinalCollapse's picture

Good one! Shall we call it "Mexican Standoff"?

kito's picture

i didnt know there are lawyers in the circus?

sagerxx's picture

They're the ones in the $3000 pinstripe clown suits.

Gringo Viejo's picture

I expect Boehner to start backing up and eating cheese any moment now.

Le Petomane 2012!

Cheesy Bastard's picture

Yes, if he caves on the debt ceiling then he can eat me.

LeBalance's picture

with or without fava beans, Clarisse?

Cheesy Bastard's picture

lol.  He likes his women like his coffee.  No, not hot, strong and black.  Ground up and in the freezer.

sgt_doom's picture

It kills me why anyone would pay any attention to anything Boehner has to say; the guy's got an IQ of 114, and couldn't even make it through US Navy bootcamp, even though he falsely claimed military service during Vietnam when he first ran for the House -- which he was forced to later admit was fraudulent.

Bob's picture

Lemme guess: DI was a little harsh on him with the crying thing?

sgt_doom's picture

That, and Boehner's chronic bedwetting....

Fazzie's picture

 I made it through the USMC bootcamp, I sure would have hated to do it with a last name like Boner.

 I imagine he had a nervous breakdown from being taunted all thru school and then at boot camp.

Gringo Viejo's picture

Parris Island 1969.....LMAO

Fazzie's picture

 MCRD San Diego..1980 and I could just imagine the creative uses of that name my DIs would of come up with for recruit Boner. Too easy! lol.

SilverRhino's picture

Another day of Kabuki theatre in Washington as the nation burns ....

Clowns on Acid's picture

If there are any "new" taxes in the final debt ceiling agreement....there will be blood.
Forecasting a technical default here. Gotta sell USTs.

tarsubil's picture

Both Dems and Reps seem to think that removing the mortgage interest deduction isn't a tax increase. Even though the middle class will pay more taxes. Do the top .1% have mortgages? Oh, who am I kidding, they probably pay their tax attorney more than my yearly income.

WestVillageIdiot's picture

Are they really talking about removing the tax deduction for mortgage ownership?  I had not heard that.  Boo hoo.  How many subsidies do we have to have for the Real Estate Industrial Complex?  Of course the biggest is just letting "owners" live for free.  Eat shit my fellow renters.  We have no lobby.

j0nx's picture

Removing that deduction will put one of two final nails in the coffin of housing for at least the next decade and probably two. Why not remove the deduction and increase mortgage rates to 7+% right now and just put housing to sleep once and for all. I think the sheep will stir over that one. I could be wrong as Americans seem to be apathetic and uninvolved unless you are talking about gay marriage but on this issue I think they will get rowdy.

snowball777's picture

Fine with me. I'll take a 7% loan on 60% of the original principal in a fucking heartbeat. Wouldn't you like to reduce your prop taxes by 40%?

Oh, you already 'own' a home...that you bought at the top of a bubble...and want price supports...or should we say water-wings?

I'm a lot more likely to 'get rowdy' about having to pay for other people's poor choices (bad timing, HELOC abuse, leveraged flippers, etc).

MachoMan's picture

It will force everyone to rent...  the landlord getting to deduct all interest and principal on the residence, given he is in the business of letting property...  increase to rental rates...  demand for mortgage proceeds declines more...  prices for residences decrease.

I strongly suspect that removing the deduction, in and of itself, could cause a stampede...  Of course, many, many people do not itemize deductions...  the only way to benefit from the deduction is to itemize...  so, maybe the fallout will be mitigated...  in the end, you need income to offset the deduction...  it isn't a tax credit after all.  Just another butt rape on middle class taxpayers...  especially those with front loaded/recent mortgages.

Cassandra Syndrome's picture

So 3 days left. They are behaving like they want a default but having the balss to admit it.

InconvenientCounterParty's picture

Strategic default is romantic isn't it? RP said we are debt slaves and he's a maverick that was actually born on U.S. soil.

MFL8240's picture

What is the pupose of reducing the deficit by 3.7 Trillion in 10 years when you currently have an annual deficit of 1.5 Trillion.  The gang bangers need to sit down an x out thes Fu_k Czars, all of the staff at the White House, all of the handouts to other countries and put an end to the distruction Wall Street has done to the American way of life.

Not a word about deficit reduction by the telepromter clown till he thought he could score some points politically.  He is a distaer, this goverment is a sell out and with corportae taxes of 23 to 29% you cannot be a competitive force against any indutrialized country.  Get rid of thes lawyers and lower rates on companies producing product in the USA. 

This plan is a disgrace and if this is the best these idiots can do, they need to go and we need people who can crunch numbers and know buisness.  Does everyone know that Mitch Mcconell, Chuck Schumer, Harry Reid, and Nacy Pelosi never held a job except in politics.  Clean the dumpster, we need more people like Demint and Paul's.


sgt_doom's picture

The purpose is to obfuscate the fact that the banksters are being paid 1.8% interest on those capital reserves by the Fed, given them from the Fed -- - really johnny taxpayer --- and they then use them in off-the-balance-sheet proprietary trading, instead of actual loans to startups, small biz, etc., thus rigging the entire game in their corrupt, slimey favor.