Last night the Cut, Cap and Balance Act of 2011 (H.R. 2560) was passed in the House by a vote of 234-190. The bill would cut and cap federal spending and would also require a balanced budget amendment to be passed by Congress prior to increasing the federal debt limit. The bill is more fiddling by House Republicans while the US burns and is not expected to pass the Senate.
The whole exercise is the “Potomac Two-Step” at its worst, a fools’ errand and a terrible waste of time with US default looming on August 2, solely designed to pander to the allegedly fiscally conservative base.
For one thing, credit agencies will nuke US bondholders on August 3 unless the debt ceiling is raised — and the Constitutional Amendment the House GOP put forward as a condition of raising the ceiling would likely take years to be ratified by the states, if it could pass at all. It’s the height of fiscal irresponsibility.
Now, with politics out of the way for the children in the House, maybe we can find the path to a solution.
It’s becoming clear that the Senate Gang of Six proposal is gaining momentum and may present the way out. The Wall Street Journal provides a great recap of the state of play. Cross your fingers.