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.