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Financial Planning > College Planning > Student Loan Debt

CBO: Boehner, Reid Debt Plans Fall Short of Promised Savings

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The budget/debt ceiling stalemate continued Wednesday as the Congressional Budget Office, found separate House and Senate proposals falling short of the savings claimed by their authors.

First, the CBO concluded out that the plan presented by Rep. John Boehner, R-Ohio and speaker of the House, failed to save as much as claimed. Then the CO said the same for the plan presented by Sen. Harry Reid, the Senate majority leader.

The Boehner plan, the CBO said, would save approximately $840 billion over a 10-year period from  2012 to 2021 when compared with March 2011 spending levels. 

Reid’s plan, the agency said, would cut more than $2.2 trillion from the budget; $500 billion less than advertised.. In addition, Reid’s plan avoids having to have another debt ceiling argument before 2013, while Boehner’s requires another confrontation in early 2012, with a hike in the debt ceiling then contingent on additional tax cuts.

Reuters reported that Reid said no Senate Democrat would vote for the Boehner plan in the event it passed the House. Boehner, however, was warning his Republican colleagues in the House to “get your ass in line” and support his bill even as it was being rewritten.

In a New York Times report, both Republicans and Democrats were voicing dissatisfaction and frustration. Rep. Jeff Flake, R-Ariz., was opposed to the Boehner plan because it did not save enough quickly enough, saying, “A lot of us recognize the most meaningful part of an agreement is what you’re willing to do immediately.”

Sen. Richard J. Durbin, D-Ill., said of the same plan, “What we’re facing here is a Republican caucus that is basically showing its political bravery by giving up Medicare benefits for elderly people, by increasing the cost of student loans for working families, by cutting money for medical research.”

Despite the stalemate, S&P said it does not believe the U.S. will default. Deven Sharma, the agency’s president, told a House of Representatives Financial Services committee hearing held to examine oversight of the credit rating agencies, “Our analysts don’t believe they would.” 


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