Washington -- President Barack Obama offered strong praise Tuesday for a deficit reduction plan put together by a bipartisan group of senators, calling the measure's mix of tax changes and spending reductions "broadly consistent" with his own approach to the current debt ceiling crisis.The plan would cut the nation's debt by about $3.7 trillion over the next 10 years -- similar to the president's call for roughly $4 trillion insavings.
Obama dismissed the Republican-led House of Representatives' plan to vote later Tuesday on a measure that would impose strict caps on all future federal spending while making it significantly tougher to raise taxes -- the solution favored by hard-line conservatives.
The president stressed that their plan has no chance of being enacted, and said legislators "don't have any more time to engage in symbolic gestures."
It's time to "start talking turkey" and see if a grand compromise involving revenue increases and entitlement reforms can still be reached, Obama said.
"We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts (and) modifications to Social Security, Medicaid and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component," Obama added.
"We now have a bipartisan group of senators who agree with that balanced approach. And we've got the American people who agree with that balanced approach."
The president refused to rule out a fallback plan proposed by Senate Minority Leader Mitch McConnell, R-Kentucky, that would raise the debt ceiling up to $2.5 trillion through the 2012 election. Obama called the plan a needed "fail-safe."
If Congress fails to raise the current $14.3 trillion debt ceiling by August 2, Americans could face rising interest rates, a declining dollar and increasingly jittery financial markets, among other things.
The seriousness of the overall situation was reinforced last week when a major credit rating agency, Standard and Poor's, said it was placing the United States' sovereign rating on "CreditWatch with negative implications." Another major agency -- Moody's Investors Services -- said it would put America's bond rating on review for a possible downgrade.
The Senate's so-called "Gang of Six" plan -- named for the group of six Democratic and Republican senators who worked on it over the past several months -- would immediately impose $500 billion in savings while reducing marginal income tax rates and ultimately abolish the controversial alternative minimum tax.
The plan would create three tax brackets with rates from 8% to 12%, 14% to 22%, and 23% to 29% -- part of a new structure designed to generate an additional $1 trillion in revenue. It would require cost changes to Medicare's growth rate formula, as well as $80 billion in Pentagon cuts.
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"We've gone from a Gang of Six to a Mob of Fifty," an upbeat Sen. Joe Manchin, D-West Virginia, told reporters as he left a meeting on Capitol Hill where other senators were briefed on the blueprint.
"We've come up with a plan, and it's comprehensive and it's balanced and it changes fundamentally the trajectory of our debt," said Sen. Kent Conrad, D-North Dakota, chairman of the Senate Budget Committee.
Sen. Tom Coburn, R-Oklahoma, announced that he had decided to rejoin the group. Coburn had recently withdrawn from the Gang of Six due to a dispute over entitlement cuts, but declared Tuesday that the plan, which now includes $116 billion in entitlement health care cost savings, has "moved significantly, and (is) where we need to be."
In contrast, the GOP's so-called "cut, cap and balance" plan is widely acknowledged to have virtually no chance of clearing the Democratic-controlled Senate or overcoming a promised presidential veto. It would, however, allow Republicans to clearly demonstrate their preference for steps favored by many in the tea party movement even as their leadership seeks a middle ground with Democrats.
The GOP plan would allow an increase in the debt ceiling only after Congress passes a balanced budget amendment to the Constitution and imposes both major spending cuts and caps on future spending as a percentage of the country's gross domestic product.
Tax increases could be approved only by a two-thirds vote of both houses of Congress.
The measure would require $111 billion in cuts in fiscal year 2012, while exempting Pentagon spending and popular entitlement programs such as Medicare and Social Security. Federal spending would be capped at less than 20% of gross domestic product by 2021, as opposed to the current 24%.
The White House released a statement Monday promising a veto if the GOP plan reaches Obama's desk.
"Instead of pursuing an empty political statement and unrealistic policy goals, it is necessary to move beyond politics as usual and find bipartisan common ground," the statement read.
White House Press Secretary Jay Carney called the proposal "classic Washington posturing and kabuki theater."
House Speaker John Boehner, R-Ohio, insisted Tuesday morning that "the president said he wanted a balanced plan (and) that's what this is -- a balanced plan."
"It's pretty clear" to Republicans that this plan is "the most responsible thing that we can do to address our problems," Boehner said. It will ensure the debt crisis "never, ever happens again."
McConnell also praised the plan, calling it "the kind of tough legislation Washington needs and that Americans want."
The GOP initiative stands in sharp contrast to Obama's stated preference for a package of roughly $4 trillion in savings over the next decade composed of tax increases on the wealthy and spending reforms in Medicare, Social Security and elsewhere.
Hopes for a so-called "grand bargain," however, appear to have faded in recent days partly because Republicans continue to insist that any tax increases could derail an already shaky economic recovery. It was not immediately clear whether the Gang of Six proposal would be able to revive those hopes.
At the heart of the tax dispute has been Obama's call for more revenue by allowing tax cuts from the Bush presidency to expire at the end of 2012 for families making more than $250,000. The president's ideal plan would keep the lower tax rates for Americans who earn less.
Obama noted last week he is not looking to raise any taxes until 2013 or later. In exchange, the president said, he wants to ensure that the current progressive nature of the tax code is maintained, with higher-income Americans assessed higher tax rates.
But resistance to higher taxes is now a bedrock principle for most Republicans, enforced by conservative crusaders such as political activist Grover Norquist. Norquist's group, Americans for Tax Reform, has sponsored a high-profile pledge to oppose any tax increase.
The pledge has been signed by more than 230 House members and 40 senators, almost all of them Republicans.
GOP leaders also have also accused the administration of employing the rhetoric of compromise while failing to offer any specifics on politically tough spending reductions.
"Mr. President, where's your plan? We haven't heard a plan (on spending cuts). We've heard a speech," Rep. Jeb Hensarling, R-Texas, said Tuesday. "We've heard a proposal to put job-killing tax increases on middle-income families and small businesses. (But) Mr. President, we haven't heard your plan."
Despite their differences, leaders from both parties insist they are committed to reaching an agreement that will allow them to raise the debt ceiling before August 2. McConnell's fallback proposal would give Obama the power to raise the borrowing limit by a total of $2.5 trillion, but also require three congressional votes on the issue before the 2012 general election.
Specifically, Obama would be required to submit three requests for debt ceiling hikes -- a $700 billion increase and two $900 billion increases. Along with each request, the president would have to submit a list of recommended spending cuts exceeding the debt ceiling increase. The cuts would not need to be enacted in order for the ceiling to rise.
Congress would vote on -- and presumably pass -- "resolutions of disapproval" for each request. Obama would likely veto each resolution. Unless Congress manages to override the president's vetoes -- considered highly unlikely -- the debt ceiling would increase.
The unusual scheme would allow most Republicans and some more conservative Democrats to vote against any debt ceiling hike while still allowing it to clear.
McConnell and Senate Majority Leader Harry Reid, D-Nevada, are also working on two critical additions to the plan, according to congressional aides in both parties. One would add up to roughly $1.5 trillion in spending cuts agreed to in earlier talks led by Vice President Joe Biden; the other would create a commission meant to find more major spending cuts, tax increases and entitlement reforms.
Changes agreed to by the commission -- composed of an equal number of House and Senate Democrats and Republicans -- would be subject to a strict up-or-down vote by Congress. No amendments would be allowed.
Sources say the panel would be modeled after the Base Closing and Realignment Commission, which managed to close hundreds of military bases that Congress could not otherwise bring itself to shut down.
The tax and spending compromises embodied in both the revised McConnell plan and the Gang of Six proposal appear to have public support, according to a series of recent polls.
A CBS News poll released Monday indicates that two-thirds of Americans say any agreement should include spending reductions and tax hikes, with 28% saying a deal should only include spending cuts and 3% saying it should only include tax increases.
According to the survey, there is little partisan divide on the question. More than seven out of 10 Democrats and more than two-thirds of independent voters support a balanced approach, as do 55% of Republicans and 53% of self-described tea party movement supporters.
A Quinnipiac University poll released last week had similar findings. The survey indicated that two-thirds of the public supported a deal that included spending cuts as well as tax increases for wealthy Americans and corporations. Nearly nine out of 10 Democrats and two-thirds of independents questioned supported the inclusion of tax increases.
Republicans in that poll were divided on the issue.
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