Senators Michael Bennet (D) and Mike Johanns (R)
The stock market has hit the ground running this afternoon on news of a $3.7 trillion Debt Ceiling plan formulated by a bipartisan “Gang of Six” in the U.S. Senate. The Gang of Six includes three Democrats and three Republicans and their debt ceiling proposal includes a mix of spending cuts and new tax revenues.
President Obama has thrown his weight behind the proposal, offering it his full support. In his afternoon press conference, the President said, “The good news is that today a group of senators, the ‘Gang of Six,’ Democrats and Republicans… put forward a proposal that is broadly consistent with the approach that I’ve urged,” referring to the Gang of Six proposal.
Obama repeated that he wouldn’t sign a bill due to be voted on later Tuesday in the House that would raise the U.S. debt ceiling on condition that deep spending cuts are made and that both chambers of Congress pass a balanced-budget amendment. This largely symbolic deal would tie the hands of Congress in an emergency or recession, with its hard debt ceiling cap.
The Dow Jones Industrial Average (DJIA) reached 12,587 points, up 202 points at its close.
The new plan brings a debt ceiling agreement much closer and follows hard on the heels of a letter sent to the President yesterday by a bipartisan group of 32 Republican and 32 Democratic Senators.
Senators Michael Bennet, Democrat of Colorado, and Mike Johanns, Republican of Nebraska, led the effort to send Mr. Obama the letter from the 64 senators. The full text of the letter is included below.
Dear President Obama:
As the Administration continues to work with Congressional leadership regarding our current budget situation, we write to inform you that we believe comprehensive deficit reduction measures are imperative and to ask you to support a broad approach to solving the problem.
As you know, a bipartisan group of Senators has been working to craft a comprehensive deficit reduction package based upon the recommendations of the Fiscal Commission. While we may not agree with every aspect of the Commission’s recommendations, we believe that its work represents an important foundation to achieve meaningful progress on our debt. The Commission’s work also underscored the scope and breadth of our nation’s long-term fiscal challenges.
Beyond FY2011 funding decisions, we urge you to engage in a broader discussion about a comprehensive deficit reduction package. Specifically, we hope that the discussion will include discretionary spending cuts, entitlement changes and tax reform.
By approaching these negotiations comprehensively, with a strong signal of support from you, we believe that we can achieve consensus on these important fiscal issues. This would send a powerful message to Americans that Washington can work together to tackle this critical issue.
Thank you for your attention to this matter.
So it seems that the endgame nears. The key question is whether the House will fall in step with the President and the Senate, but at this point, once they are past the theater of “cap-cut-and-balance”, they will likely do so before the August 2 deadline.
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