‘Gang of Six’ debt plan gains favor

House Republicans pass ‘cut, cap and balance’ measure

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U.S. Rep. Jaime Herrera Beutler, R-Camas, joined the overwhelming majority of her caucus Tuesday in voting for a Tea Party-backed deficit reduction bill that stands little chance in the Senate and faces a veto if it reaches President Barack Obama.

The so-called “Cut, Cap, and Balance” plan would extend the nation’s borrowing capacity in return for a cap on future government spending and a balanced budget amendment. It passed 234-190, with Democrats largely united in opposition.

It would cut spending by $111 billion in 2012 and cap future outlays to 19.9 percent of the nation’s gross domestic output. It also would require that Congress send a balanced-budget constitutional amendment to the states for ratification.

“The plan I supported today would avoid a default, bring Washington, D.C. spending under control, protect Social Security, and not raise taxes on Southwest Washington families and businesses,” Herrera Beutler said in a statement. “I hope the president doesn’t block this bill as he has suggested he will because I don’t want the government to default. Regardless, I’ll keep working to find a solution by Aug. 2 that protects seniors and families and puts an end to overspending.”

WASHINGTON — Defying a veto threat, the Republican-controlled House voted Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default.

The 234-190 vote marked the power of deeply conservative first-term Republicans, and it stood in contrast to calls at the White House and in the Senate for a late stab at bipartisanship to solve the nation’s looming debt crisis.

President Barack Obama and a startling number of Republican senators lauded a deficit-reduction plan put forward earlier in the day by a bipartisan “Gang of Six” lawmakers that calls for $1 trillion in what sponsors delicately called “additional revenue” and some critics swiftly labeled as higher taxes.

The president said he hoped congressional leaders would “start talking turkey” on a deal to reduce deficits and raise the $14.3 trillion debt limit as soon as today, using that plan as a road map.

Wall Street cheered the news of possible compromise as well. The Dow Jones industrials average soared 202 points, the biggest one-day leap this year.

Treasury officials say that without an increase in U.S. borrowing authority by Aug. 2, the government will not be able to pay all its bills, and default could result in severe consequences for the economy.

Yet a few hours after Obama spoke at the White House, supporters of the newly passed House measure breathed defiance.

“Let me be clear. This is the compromise. This is the best plan out there,” said Rep. Jim Jordan, R-Ohio, head of a conservative group inside the House known as the Republican Study Committee.

The legislation, dubbed “Cut, Cap and Balance” by supporters and backed by Tea Party activists, would make an estimated $111 billion in immediate reductions and ensure that overall spending declined in the future in relation to the overall size of the economy.

It also would require both houses of Congress to approve a balanced budget amendment to the Constitution and send it to the states for ratification. The amendment itself would require a supermajority vote in both houses of Congress for any future tax raises.

With time dwindling, the day’s events did little to suggest a harmonious end was imminent in a defining clash between the two political parties.

Senate Democrats have announced they will oppose the House passed-measure, although it could take two or three days to reject it.

Yet there were signs that with Tuesday night’s vote behind them, House Republican leaders might pivot swiftly.

Even before the vote, Speaker John Boehner told reporters that it also was “responsible to look at what Plan B would look like.”

And House Majority Leader Eric Cantor issued a statement saying of the Gang of Six proposal: “This bipartisan plan does seem to include some constructive ideas to deal with our debt.”

Debate in the House was along predictable lines, and only nine Republicans opposed the bill and five Democrats supported it on final passage.

The Gang of Six briefed other senators on the group’s plan after a seemingly quixotic quest that took months, drew disdain at times from the leaders of both parties and appeared near failure more than once.

It calls for deficit cuts of slightly less than $4 trillion over a decade and includes steps to slow the growth of Social Security payments, cut at least $500 billion from Medicare, Medicaid and other health programs and wring billions in savings from programs across the face of government.

It envisions tax changes that would reduce existing breaks for a number of popular items while reducing the top income bracket from the current 35 percent to 29 percent or less.

The tax overhaul “must be estimated to provide $1 trillion in additional revenue to meet plan targets,” according to a summary that circulated in the Capitol.