Boehner Releases Revised Plan: To Cut $91.7 Billion Each Year For A Decade, Buys 4 Months Before Next Debt Ceiling Hike

Tyler Durden's picture

The epic revision in the just revised Boehner plan is to cut a grand total of ... $91.7 billion per year for 10 years (back-end loaded of course: 2012 will see just $22 billion in cuts - can't have any real cuts too early or else). The spin is that this is sufficient because the $917 billion in cuts is more than the proposed $900 billion debt ceiling hike, so all shall be well. Of course that is only part one of the two-part debt ceiling hike process. The next step is a $1.8 trillion cut to "protect programs like Medicare and Social Security from bankruptcy."  The problem is that Boehner continues along the path of a two-step debt hike, a formulation that Obama will never agree to, since it effectively guarantees him no-reelection chance, as the last thing the people will want is the same bickering as we are experiencing every day again some time in 2012, when the current $900 billion in incremental debt capacity runs out. And actually, with the US debt already $300 billion below trendline and with the government's two pension funds already plundered by a like amount (which means they have a net IOU position), it means that the Boehner plan really buys only $600 billion of dry powder. At a burn rate of $150 billion a month, this means the first step of the Boehner plan buys precisely 4 months before the debt ceiling has to be raised again! Oh yes, this plan also guarantees at least a one notch downgrade to the US debt, with more notches coming up before the end of the year when this whole farce is repeated.

Full release:

BREAKING: Independent CBO Confirms Spending Cuts Exceed Debt Limit Hike in Revised GOP Plan; Bill Now Includes $22 Billion in Deficit Reduction in First Year

Posted by Speaker Boehner's Press Office on July 27, 2011

The Congressional Budget Office (CBO) has released its analysis of the revised Budget Control Act of 2011 today, and CBO’s analysis confirms that the spending cuts are greater than the debt hike – affirming that the House GOP bill meets the critical test House Republicans have said they will insist upon for any bill to raise the nation’s debt ceiling. Specifically, the CBO analysis confirms the Republican plan will:

  • Cut and cap spending by $917 billion over 10 years – that’s more than the $900 billion debt hike;
  • Cut $22 billion in spending for FY2012 and hold spending below FY2010 levels until FY2016;
  • Continue reducing discretionary spending each year compared to President Obama’s budget (by $96 billion in 2012, $118 billion in 2013, $115 billion in 2014, $117 billion in 2015, and so on); and
  • Require Congress to draft proposals that produce reductions of at least $1.8 trillion that help protect programs like Medicare and Social Security from bankruptcy.

Republicans adjusted their spending cut bill after a lower-than-expected score from CBO. This updated analysis confirms what others are saying: the Republican plan “changes the trajectory of spending” and “would keep the debt cutting process going.” Unlike Senator Reid’s gimmick-filled plan, the Republican proposal includes real spending cuts and reforms that will restrain future spending – and the spending cuts are larger than the debt limit increase.

This bill is far from perfect, but it’s a positive step forward that denies President the $2.4 trillion blank check that lets him continue his spending binge through the next election. Learn more about it here.

 


And here Paul Ryan explains how this grand plan will cut a whopping $22 billion in all of 2012.

 

 

The Budget Control Act has been updated to make certain that House Republicans fulfill their pledge to cut spending more than we increase the debt limit.  Congressional Budget Office numbers confirm that the updated legislation adheres to this pledge: no new taxes; no blank check for the President; spending cuts greater than the size of the debt limit increase.

The bill has been revised to increase outlay savings, according to the Congressional Budget Office.  The Budget Control Act caps budget authority each of the fiscal years from 2012 to 2021.  Budget authority – the authority Congress provides to agencies to spend each year – is set at a fixed level for the next decade under the Budget Control Act.   Budget authority eventually results in the actual spending of money, which are recorded as outlays.  Outlays are recorded when agencies spend out the money they’ve been provided through budget authority.

The updated legislation makes no changes to the annual budget authority caps, but removes a limitation on outlay calculations that was included in the first version of the bill. This adjustment allows the Congressional Budget Office to provide a more accurate measure of the likely rate of spending.  In their new analysis of the Budget Control Act, the CBO estimates that the bill will reduce the deficit by $22 billion in FY 2012, and by $917 billion between 2012 and 2021. Under the bill, the President is given authority to increase the debt, under certain conditions, by up to $900 billion.  Based on CBO estimates, the spending savings exceed the amount of this debt increase.

The revised bill will also include a point of order against consideration of a measure that would violate the discretionary spending caps put in place by the bill, which in the Senate would require a three-fifths vote in the Senate to waive.  In addition, three provisions from the original bill are modified to address technical timing issues with respect to resolutions of disapproval.

For a review of discretionary spending next year under the Budget Control Act, showing real cuts relative to FY2011, and spending cuts far closer to the House-passed budget as opposed to the President’s request to increase government spending:



And from the revised CBO score (link here), here is the only table that matters:

 

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mynhair's picture

Replace Boner as Speaker now!

The idiot refuses to learn.  Crush the Libs!

oh_bama's picture

Why no one is talking about CHINA'S NEW BOAT THAT IS DESIGNED FOR EDUCATION AND TOUR GROUPS ONLY?

mynhair's picture

Cuz Libs can't figure out how to use their Tomtoms to find the embarkation area.

Ahmeexnal's picture

JPig and GS about to get busted in Brazil:

http://avilacmg.wordpress.com/2011/07/27/bn-brazil-charges-1-tax-on-some...

 

As part of currency measures unveiled today, the government levied a 1 percent tax on some net short dollar positions by investors in the country’s futures market. The government may increase the tax up to 25 percent if needed, according to the decree signed by President Dilma Rousseff and published today in the Official Gazette.

 

 

GetZeeGold's picture

Replace Boner as Speaker now!

He doesn't know any better anymore......he's been Institutionalized.

http://www.youtube.com/watch?v=TsiFanovOSI

 

DormRoom's picture

Those Republicans sure know how to play hardball.

 

If Boner gets what he wants Obama 2012 election chance is greatly reduced.  If Obama goes against Boner's plan, and causes a financial meltdown, he is unelectable.

 

It's like choosing between AIDS, and a sea of AIDS.  Obama's gonna cave, and we'll be back to discuss this in 5 months.

Almost Solvent's picture

The senate will not pass Boner's plan so it's all moot anyway, no bill to veto because no bill ever reaches his desk

 

duh

whaletail's picture

Wouldn't be so sure, Solvent. If you're a Dem Senator, and you're up for election in 2012, do you want to tell your State that YOU voted against a plan that could have staved-off default (assuming, of course, default leads to the immediate gloom and doom that some predict, including Timmy)? So, go to the other side of the aisle, shrug and say "I had no choice" and vote for any plan in front of you that will "wash your hands" of any blame. If it gets to Obama, and he vetoes the bill, it isn't your fault. I'm sure the Republicans have already targeted these Dem senators.*

There are no loyalties in politics, even to those in your own party. 

*I, of course, have not done the research to determine the weakness of these senators, so this comment could be baseless. 

mynhair's picture

Oweblahma is getting primaried.

Scisco's picture

You are of course assuming that there is a functioning government that could run an election!

Weisbrot's picture

 

nationalize the fed and erase the debt

 

 

CompassionateFascist's picture

IQs must be dropping suddenly at ZH....Repubs acting like cockroaches poured out of bottle. Crybaby's plan won't even be supported by TPs, it's such a transparent surrender. Zero wants the whole debt limit increase now and, since all but the TPs are invested in the Ponzi, that's what he will get via House alliance of RINOs + Dems. The kicker is, at the rate the Govt is bleeding red ink, $2.whatever trillion won't get him thru 2012 election. This is going to blow sky high...about this time next year. I can wait....

trav7777's picture

91B is fucking NOTHING.

We are running north of $2T PER YEAR

slaughterer's picture
Boner plan = no plan.   FUCK BONER WITH A BONER UP THE A$$
gall batter's picture

No plan is still a plan.  it's called no plan.  

Papasmurf's picture

That's been the plan for years.

MarkD's picture

Come on....... Boners plan is gonna cut $22b from a $1.7t deficit next year. Wow, that's some serious cuts. We will have to live within our means for at least 5 fuckin days next year. How will we survive?

This is such a joke. Can't get over how stupid Americans are.

dwdollar's picture

Why are people junking you?

slaughterer's picture

Sorry, but this Boehner plan is doing absolutely nothing for ES or PM futures right now.

-200 on Dow tomorrow.

Sam Clemons's picture

http://thelastcanary.blogspot.com/  my charts show there may be some more weakness in the short term before a politically induced bounce (2 or 3 days max) and then hell should really break loose.

caerus's picture

imho forget causality...this shit has been brewing for a while...i see support at ES 1280, 1260 to be conservative...then you'll get your typical fib bounce...

caerus's picture

fuck the politicos...my whiskey mind says we got a massive head shoulders / trip top that began in january...sell this shit..sell it hard..then take  a vacation

cara leaf's picture

When you print counterfeit money to pay debts, you are already in default.

 

Founders Keeper's picture

Indeed.

Oh, the insidious advantages of fiat currency.

 

Sam Clemons's picture

Haha, awesome.  Yes, for some reason people don't understand that if you aren't paying back debt in full (which you aren't if the units are worth less), then you are undergoing a camouflaged default. 

Unfortunately, camouflaged default benefits the already rich and punishes the poor.  Official default punishes the already rich.

DrunkHarryReid's picture

mynhair

 

You are dumb. A public service message from your friends at The Onion (and DrunkHarryReid).

DrunkHarryReid's picture

mynhair

 

You are dumb. A public service message from your friends at The Onion (and DrunkHarryReid).

jwäges's picture

Take a look at Boehners version, in particular pg 35, starting with section 401. It is nearly identical in language to the Senate version. This Joint Select Comitee, is not constrained soely to deficit reduction, is appointed not elected, can originate legislation, suspends all congressional and senate rules regarding its legislation, can over ride vetos by itsself. Appointment for three comitee members is made by the House and Senate majority and minority leaders for a grand total of 12 members. These appointments are for the life of the comitee, or their tenure, and vacancies are filed within 14 days. In summation this is the motivation for this manufactured crisis, passage of this legislation. It matters not which version is ultimately made into law, as this section is nearly identical in both versions. Welcome to fascism.

SEC. 401. ESTABLISHMENT OF JOINT SELECT COMMITTEE

?
Go to page 35 for the part on the Super Congress. God help us if this is enacted.   http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/S627%20amnt.pdf

Sincerely, Joe Wäges

Sp00ky's picture

As you state the powers of this so-called Joint Select Committee, it cannot pass the Constitutional test.  It requires a Constitutional amendment, and you know what that requires.  Meaning, ain't gonna happen.  Someone(s) on the Hill has been smoking too much of their own smoke.

whiskeyjim's picture

I disagree with Durden and you. There was never going to be any grand plan. There never will be any grand plan. The reason is simple. Obama and the Dems do not believe we have a debt problem; you can only negotiate with people who are sane.

The only course left is to do this thing in small chunks, with the debt ceiling gun to everyone's head.

Boehner's largest mistake was to ever try to do something large. He fucked up. He thought the other side was rational. He needs to bring on one discussion after another. It will take 10 years anyway. TURN THE GOVERNMENT INTO A FULL TIME DEREGULATOR. Give them no time to dream up more shit to control.

NO ONE is going to shut down the government because the cuts are too small. No one.

 

buzzsaw99's picture

The Guyliner has spoken.

No Bid's picture

Considering what's going on, Google Trends is pretty hilarious right now.  Real Housewives of Beverly Hills is in the top ten.

Commence crash.

Vic Vinegar's picture

Contrasting Google Trends with what's written on this site each day is always amusing.

People care about Carlos Beltran and Kyle Orton, not Boehner and Barack.

Shameful's picture

Never have the masses been concerned about the real goings on of the world and things that heavily impact their lives.  So while they could spend hours going over "boring" things, or they look up little facts and videos they can talk to their peers about.  In my personal life I tend to avoid the finance topic because people have no idea what is happening, even "educated" people who studied economics.  So I come off as either a "nerd" or "boring" because I know so much about he financial structure.  Stupidity and ignorance is reveled in.  We are living in a culture that glories banality and mediocrity, makes for a very easy for people to be fooled.

If anyone doubts this, randomly bring up something simple like fractional reserve banking or asking what another person things about QE and see the response you get.  Might as well be speaking a foreign language to them.

cossack55's picture

It is a foreign language. Greek, I think.

Backspin's picture

Yep, that's exactly my experience also.  I have a friend who can talk for hours about sports, but bring up something about the banking industry or the bond market or the national debt and he's ready to go chat with someone else, and he's a financial advisor - that's what he does for a living.  And he's in debt.  And that's just one example, but I won't ramble on.  It's refreshing to come here and find people who understand that we're on the edge of a cliff, and heading toward the edge, and that our politicians, in nearly everything they do, are stepping on the gas pedal.

V in PA's picture

Yes!. I love the people of ZH. Even the haters. Been reading for over two years now. Just join 3 weeks ago. Reading the comments and articles has been the best intellectual exercise of my life. Most of the sheeple I encounter are so vapid and boring I feel we are doomed. This is one, of the few, rays of hope left for world.

 

God Bless the Internet

Nikao7's picture

That's pretty much my story as well.  I'm a simpleton but an informed simpleton. 

Plato summed it up nicely........

"Those who are able to see beyond the shadows and the lies of their culture - will never be understood, let alone believed, by the masses." - Plato

Mentally speaking most of us around here are island dwellers amongst the masses.

Backspin's picture

In Plato's cave allegory, I think they ended up killing the guy who saw the daylight and understood.

UGrev's picture

sit in a walmart parkcing lot one day. It will give you an idea of who will be rushing your property and how to deal with them ;)