Congressman Tim Bishop on Tuesday announced he would not support a new debt proposal by United States House of Representatives Speaker John Boehner and would instead “reluctantly” support a plan by Senate Majority Leader Harry Reid.
Bishop said that supporting Boehner’s proposal would be tantamount to supporting cuts to Medicare, Medicaid and Social Security, while preserving tax loopholes, assuring the country’s credit rating would be downgraded and “the specter of government default” would continue to haunt the country.
“I cannot vote for something that is so damaging to the middle class families I was elected to fight for and so contrary to every value I believe in,” said Congressman Bishop in a statement. “My line in the sand is that I will not support a deal that asks Medicare recipients to sacrifice, but does not ask for an ounce of sacrifice from big oil companies and hedge fund managers. It is long past time to find a reasonable compromise and then get on to the business of helping Americans find jobs.”
Under Boehner’s two-stage plan to help increase the $14.3 trillion federal debt limit, Congress would immediately cut $1.2 trillion in domestic discretionary spending over the next 10 years. That would reduce the debt ceiling for six months, when Congress would have to take up the issue again.
Bishop said the plan would then require Congress to cut an additional $1.8 trillion in spending over 10 years without any increase in revenues, which would lead to cuts in Medicare and Medicaid, as outlined in the budget passed by House Republicans in April.
The White House has also come out against the Boehner plan, with President Barack Obama stating the plan offers only a temporary solution, which could lead to market instability, wounding an already delicate economy.
In his statement, Bishop said that should the nation be subjected to another “debt limit showdown” in six months time, bond rating agencies, including Standard & Poor’s, have said they might still reduce the country’s AAA bond rating to AA despite the extension of the debt ceiling.
Such an historic cut would mean higher interest rates on everything, said Bishop, from the debt paid by the government to mortgages, credit cards and student loans — essentially imposing a tax on all Americans, he added.
Bishop said he has consistently advocated for a balanced approach in deficit reduction, combining spending cuts with revenue increases by eliminating loopholes and “waste expenditures” in the tax code.
Bishop said he would “reluctantly” vote for a proposal by Senate Majority Leader Reid, despite the fact that his plan does not seek to close loopholes in the tax code, in an effort to avoid a government default.
According to Bishop, Federal Reserve Chairman Ben Bernake in an address to Congress last week said that failing to raise the debt ceiling by the August 2 deadline would “no doubt have a very adverse effect very quickly on recovery.”
The government would have to cut 40 to 45 percent of federal outlays, said Bishop, potentially jeopardizing Social Security benefits, paychecks for members of the military, and the nation’s ability to pay interest on outstanding debt.
With that knowledge, Bishop has decided to support the Reid proposal to cut $2.7 trillion over 10 years with no revenue increases or cuts to Medicare, Medicaid or Social Security. The plan also takes into account $1 trillion in savings in reduced costs relating to the wars in Afghanistan and Iraq.
However, after Bishop released his statement, on Tuesday night House Republican leaders were forced to delay a scheduled vote on the Boehner plan to Wednesday or Thursday, as Republican House leaders scrambled to revise the proposal after the non-partisan Congressional Budget Office said his plan would cut spending by $850 billion over the next decade. That is about $150 billion less than the $1 trillion increase proposed for the debt limit.
The Congressional Budget Office also released its findings on the Reid proposal on Tuesday morning, stating it would actually save $2.2 trillion over the next decade, not $2.7 trillion as Reid has stated.
President Obama has said he will veto the Boehner plan if it passes both the House and the Senate and arrives on his desk. Pundits in Washington have stated the Reid plan has little hope of making it through a conservative House of Representatives.