"Cut, cap and balance" is the next step for the debt ceiling negotiations
There was little compromise this weekend between Congressional leaders and the White House on the debt ceiling and deficit reduction. According to Hawkings, unless there's some sort of super top-secret backchannel deal making going on, there's a slim chance that a bargain will be negotiated within the next two weeks. However, he says the end game for something different is starting to come into view.
"It starts tomorrow in the House, which has canceled its recess for the week. It's legislation called 'Cut, Cap and Balance,' and it would cut $30 billion from spending this year, it would cap all federal spending 20 percent the size of the economy within a decade, and it would require that the debt ceiling increase not happen until a balance budget constitutional amendment happen to the states."
Hawkings says it's designed to give conservative Republicans something to be happy about – to say that they tried before the pressure really goes on them to go to the real deal, which needs to be passed probably next week.
McConnell-Reid plan could be ready by mid-week
We've been hearing more from the Senate about the McConnell-Reid plan that was initially introduced by Mitch McConnell. The plan would give the President the ability to raise the debt ceiling. Hawkings says this plan is what he refers to as the "real deal."
"It does seem as though the so-called McConnell plan, which is now being called the McConnell-Reid plan will be ready by the middle of the week. It is looking like where we’re headed. What it would do is essentially give the president what he wants, which is $2.5 trillion in extra borrowing authority, which is enough to get to the next election. It would offer the republicans a chance to vote no on that and to exercise their anger about that, but it would not probably dictate any spending cuts."
Hawkings says there's solid support for this in this in the Senate, and now it basically all comes down to the House.
"There are probably 40 House republicans who won't vote against this in any circumstance. That means that the republicans are going to have to work hard to come up with about 120 votes on their side."
Taxes appear to be the main issue between Republicans and Democrats
When you look at all the headlines on this, it seems like there's been a real impasse between the two parties, but at the same time, there is potentially some movement on this McConnell deal. Hawkings says that despite the arguments, republicans and democrats are actually not that far apart.
"It is true that both sides have identified more than a trillion dollars in cuts – some of them politically painful from each side, maybe as many as 1.5 trillion in spending reductions over the next 10 years. The democrats are reluctantly talking about curbing Medicare and Medicaid, which is their holy grail of programs that they’re most proud of. So except for taxes, they’re pretty close. So if the republicans can find some wiggle room, I would say there is a deal possible. And they have essentially 14 days."