Numerous outlets are now reporting that Senate Majority Leader Harry Reid, D-Nev., has put together a package to raise the debt limit that contains $2.5 trillion in spending cuts without any offsetting tax increases. Roll Call's Meredith Shiner tweets further that the proposal won't touch entitlements. How might Reid achieve such a magic trick?
While details have yet to emerge, House Minority Leader Nancy Pelosi, D-Calif., telegraphed the likely approach during a Friday session with liberal bloggers. Talking Points Memo's Brian Beutler quoted Pelosi as saying, “We could use the offshore — the Overseas Contingency [the wars in Iraq and Afghanistan] — could take us to two-and-a-half trillion dollars.”
In other words, if you count the savings from ending the wars in Afghanistan and Iraq — which are expected to end over the next 10 years anyway — add some additional discretionary spending cuts and assume lower interest payments, it could reach the number that Reid is proposing.
However, such a proposal wouldn't represent $2.5 trillion in real cuts, nor would it even start to address the trajectory of our long term debt, which the rating agencies said puts us at a risk for a downgrade, even if the debt ceiling is raised.
We'll soon see whether my suspicions about the Reid proposal prove correct.