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Debt Limit Comes Closer as Congress Begins to Move

Norquist was not alone in attacking the new plan. The Cato Institute’s Dan Mitchell, one of the sharpest economists in Washington, conceded that while there were some things in the new plan that were good, comparatively speaking the “Good,” the “Bad” and the “Ugly” far outweigh anything even remotely desirable about the so-called “Gang of Six” plan.

In the “Bad” category, Mitchell identified a number of issues, including that “the much-heralded spending caps do not apply to entitlement programs,” which he described as “going to the doctor because you have cancer and getting treated for a sprained wrist.”

Mitchell also identified the lack of real reform of Medicare and Medicaid as well as “a net tax increase of more than $1 trillion,” which he admitted he expected to go higher as the specific details of the plan become public. He noted that it “targets some provisions of the tax code -- such as IRAs and 401(k)s -- that are not preferences, but instead exist to mitigate against the double taxation of saving and investment.”

In the “Ugly” category is the fact that the “Gang of Six” plan is “based on dishonest Washington budget math.”

“Spending increases under the plan,” Mitchell wrote on his blog, “but the politicians claim to be cutting spending because the budget didn’t grow even faster."

He also identified what he called “a back-door scheme to change the consumer price index in such a way as to reduce expenditures (i.e., smaller cost-of-living-adjustments) and increase tax revenue (i.e., smaller adjustments in tax brackets and personal exemptions). The current CPI may be flawed, but it would be far better to give the Bureau of Labor Statistics further authority, if necessary, to make changes.”

There is also the plan put forward by Senate Republican Leader Mitch McConnell, which has been embraced by Senate Majority Leader Harry Reid and House Democratic Leader Nancy Pelosi. This plan would give the president the debt limit increase he seeks -- subject to congressional resolutions of disapproval -- but would lay the political blame for the consequences squarely at Obama’s feet.

That approach, which has been called “Plan B,” is also under assault from conservatives in the House who object to giving the president everything he wants -- an increase in the debt limit -- without winning anything in return.

There’s more -- but the plans seem to be non-starters in the same House that just passed the Cut, Cap and Balance Act. Only time will tell.

Also read: House Republican and Democrat Want Vote on the 'Gang' Plan, at the Tatler.