Speaker of the House John Boehner (R-OH) with either a big gavel, or a tiny oil drum on a stick. (photo from Speaker's website)

John Boehner gets a major test of his leadership today when his plan to increase the debt limit gets a vote in the House. I think he’ll pass, as he’s designed the test and can give out the answer sheets, to use a pretty poor metaphor. I don’t believe Boehner would allow this up for a vote if he weren’t confident of passage, though he has been burned before. He can afford at least 23 defections. House Democrats say they won’t offer one vote for the package, but on Cut Cap and Balance, Republicans drew 5 Democratic votes. The Hill’s whip count lists 22 no or lean-no Republican votes. I imagine it will sneak by.

What is unclear is how Harry Reid will react. Much will depend on whether or not Boehner’s bill passes.

If Boehner’s bill passes today, Reid will have to decide whether to try to vote it down symbolically or to amend it and send it back to the House for final passage. If Boehner falls short of the 217 votes needed to pass his plan, Senate Democrats will likely start the formal process of moving on their bill and hope it passes their chamber.

Either way, Congress is running out of time to raise the debt ceiling by Tuesday’s crucial default deadline — and it was clear Wednesday that the clock is making lawmakers nervous.

“Magic things can happen here in Congress in a very short period of time under the right circumstances,” Reid told reporters after conceding that he needed to act “very soon” to have enough time to get a bill to the president’s desk.

Reid continues to insist the Boehner bill is “dead on arrival” in the Senate. He told reporters Wednesday: “Don’t worry, it will be altered if it gets over here. … It’s fairly easy to do procedurally.”

It’s especially easy in this case because they are very similar bills. While I noticed another key difference while reading the bills last night – Boehner’s uses Mitch McConnell’s clumsy resolution of disapproval process to allow Republicans to ultimately vote against increasing the debt limit while still allowing it to increase, while Reid’s bill just increases the debt limit. But that’s a process difference leading to the same conclusion. The only major difference is the timing on increasing the debt limit itself, along with a few mandatory spending changes and the fact that Reid scores the savings from the Afghanistan and Iraq war drawdown.

As Brian Beutler reports, it’s not hard to figure out the compromise here.

These similarities, some aides and members believe, indicate that a final solution will look something like this: Republicans will have to relent a bit on the two-step debt limit process, so that the government is all-but guaranteed to be able to issue new debt through 2012. Democrats will agree to some sort of trigger mechanism, to assure that entitlement and tax reforms actually happen sometime in the next several months — the Gang of Six plan could be expedited, or perhaps the plan authored by the co-chairs of President Obama’s fiscal commission.

That’s probably the endgame here. At that point, it will just be a matter to match annual appropriations to fit under the spending cap – or, if a future Congress chooses, to ignore the cap.

The near-term spending cuts will be a fiscal drag, though I probably shouldn’t have included the expiration of the payroll tax cut and unemployment insurance, which is independent of this bill. Macro Advisers has this report, but their estimate is based off the initial Boehner plan. His revised plan has more up-front spending cuts, making it more similar to Reid’s:

We estimate that the Reid plan would slow GDP growth (again, statically) by about ¼ percentage point on average from fiscal year (FY) 2012 through FY 2015, with the peak effect being almost ½ percentage point in FY 2013.

We estimate that the Boehner plan would slow GDP growth by only about 0.1 percentage point on average over the same period, with the peak effect being a little over 0.2 percentage point in FY 2014.

Our current forecast shows more fiscal drag from discretionary spending in FY 2012 than either of these plans, and more drag in FY 2013 than the Boehner plan. The Reid plan does show more drag in FY 2013 than our forecast assumes, but we seriously doubt that the war effort could be scaled back as sharply or quickly as the Reid plan apparently contemplates. Furthermore, such near-term cuts would surely encounter stiff Republican opposition.

Again, this number is working off an old plan of Boehner’s. In addition, I disagree with Macro Advisers’ analysis on the drawdown of the wars, especially if Iraq goes to private trainers. You could get to $50 billion for FY 2013 pretty easily.

In addition, the analysis is incomplete, because we don’t know what will become of the Super Congress, the Catfood Commission II. And that could have serious near-term effects, and drags on growth.

The real point here is that we’re debating among two plans that will hurt the economy.

Speaker of the House John Boehner (R-OH) with either a big gavel, or a tiny oil drum on a stick. (photo from Speaker's website)

John Boehner gets a major test of his leadership today when his plan to increase the debt limit gets a vote in the House. I think he’ll pass, as he’s designed the test and can give out the answer sheets, to use a pretty poor metaphor. I don’t believe Boehner would allow this up for a vote if he weren’t confident of passage, though he has been burned before. He can afford at least 23 defections. House Democrats say they won’t offer one vote for the package, but on Cut Cap and Balance, Republicans drew 5 Democratic votes. The Hill’s whip count lists 22 no or lean-no Republican votes. I imagine it will sneak by.

What is unclear is how Harry Reid will react. Much will depend on whether or not Boehner’s bill passes.

If Boehner’s bill passes today, Reid will have to decide whether to try to vote it down symbolically or to amend it and send it back to the House for final passage. If Boehner falls short of the 217 votes needed to pass his plan, Senate Democrats will likely start the formal process of moving on their bill and hope it passes their chamber.

Either way, Congress is running out of time to raise the debt ceiling by Tuesday’s crucial default deadline — and it was clear Wednesday that the clock is making lawmakers nervous.

“Magic things can happen here in Congress in a very short period of time under the right circumstances,” Reid told reporters after conceding that he needed to act “very soon” to have enough time to get a bill to the president’s desk.

Reid continues to insist the Boehner bill is “dead on arrival” in the Senate. He told reporters Wednesday: “Don’t worry, it will be altered if it gets over here. … It’s fairly easy to do procedurally.”

It’s especially easy in this case because they are very similar bills. While I noticed another key difference while reading the bills last night – Boehner’s uses Mitch McConnell’s clumsy resolution of disapproval process to allow Republicans to ultimately vote against increasing the debt limit while still allowing it to increase, while Reid’s bill just increases the debt limit. But that’s a process difference leading to the same conclusion. The only major difference is the timing on increasing the debt limit itself, along with a few mandatory spending changes and the fact that Reid scores the savings from the Afghanistan and Iraq war drawdown.

As Brian Beutler reports, it’s not hard to figure out the compromise here.

These similarities, some aides and members believe, indicate that a final solution will look something like this: Republicans will have to relent a bit on the two-step debt limit process, so that the government is all-but guaranteed to be able to issue new debt through 2012. Democrats will agree to some sort of trigger mechanism, to assure that entitlement and tax reforms actually happen sometime in the next several months — the Gang of Six plan could be expedited, or perhaps the plan authored by the co-chairs of President Obama’s fiscal commission.

That’s probably the endgame here. At that point, it will just be a matter to match annual appropriations to fit under the spending cap – or, if a future Congress chooses, to ignore the cap.

The near-term spending cuts will be a fiscal drag, though I probably shouldn’t have included the expiration of the payroll tax cut and unemployment insurance, which is independent of this bill. Macro Advisers has this report, but their estimate is based off the initial Boehner plan. His revised plan has more up-front spending cuts, making it more similar to Reid’s:

We estimate that the Reid plan would slow GDP growth (again, statically) by about ¼ percentage point on average from fiscal year (FY) 2012 through FY 2015, with the peak effect being almost ½ percentage point in FY 2013.

We estimate that the Boehner plan would slow GDP growth by only about 0.1 percentage point on average over the same period, with the peak effect being a little over 0.2 percentage point in FY 2014.

Our current forecast shows more fiscal drag from discretionary spending in FY 2012 than either of these plans, and more drag in FY 2013 than the Boehner plan. The Reid plan does show more drag in FY 2013 than our forecast assumes, but we seriously doubt that the war effort could be scaled back as sharply or quickly as the Reid plan apparently contemplates. Furthermore, such near-term cuts would surely encounter stiff Republican opposition.

Again, this number is working off an old plan of Boehner’s. In addition, I disagree with Macro Advisers’ analysis on the drawdown of the wars, especially if Iraq goes to private trainers. You could get to $50 billion for FY 2013 pretty easily.

In addition, the analysis is incomplete, because we don’t know what will become of the Super Congress, the Catfood Commission II. And that could have serious near-term effects, and drags on growth.

The real point here is that we’re debating among two plans that will hurt the economy.

David Dayen

David Dayen