Economist: 'Gang of Six' has best debt-ceiling plan
U.S. President Barack Obama meets with congressional leaders including Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner (R-OH) in the Cabinet Room of the White House.
JEREMY HOBSON: Now let's get to the debt ceiling debate going on in Washington. Hopefully I'll only have to say that for another 13 days, because that's when we reach the deadline to raise the ceiling, to avoid a default. Richard DeKaser is an economist with the Parthenon group. He's with us live from Boston as he is every Wednesday. Good morning.
RICHARD DEKASER: Good morning.
HOBSON: So Richard we've got a couple plans on the table what do you think is going to happen?
DEKASER: Well it really looks like the plan with the best chance is the so-called grand bargain struck by the "Gang of Six" yesterday. The reason I say that is half of the Senate with equal numbers of Democrats and Republicans already came out in support of it, that gives it a bipartisan hue and makes it difficult for others to go their own way given that its got this cohesiveness, so that looks like the big deal. It is truly big but its complicated, Part A of this plan is to legislate immediate costs spending reductions that is in the next 12 days before the debt ceiling is increased. Part B is much more complicated, it has a lot of proposals to do many more important but complicated long-term things, including essentially restructuring the U.S. tax code.
HOBSON: And that would happen over how long a period of time?
DEKASER: Well, it's not clear but presumably between now and between election season, November of next year. It hasn't been spelled out in any detail but that's part of the overall plan that people would be voting on, not the legislation itself but presumably guidelines that would implement that legislation between now and election day.
HOBSON: And you think they are going to able to make these tough decisions over the next 12 to 18 months or so?
DEKASER: Um, I don't know and this comes down to the issue of enforcement. Is the legislation to increase the debt ceiling written in such a manner as to provide strict enforcement mechanisms so they they must reach these objectives, or if it is kind of wishy-washy so that you could easily see it bogging down an election year which are generally not know for getting things done.
HOBSON: Richard DeKaser, economist with the Parthenon group, thanks as always.
DEKASER: My pleasure.