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Gang of Six: A Day Late...

A new deficit reduction proposal from the so-called Gang of Six generated wildly different reactions on Tuesday, even among relatively like-minded officials and staff.

Some praised as proof that members of both parties could support a plan that substantially reduces the deficit with a combination of new revenue and spending cuts. During an early afternoon press conference, President Obama called the plan “broadly consistent” with his calls for a balanced, bipartisan approach to improving the government's finances.

Others, generally speaking anonymously, were annoyed if not downright angry. It wasn’t the content of the proposal that bothered them. It was the timing. They worried that its introduction would complicate and perhaps delay negotiations, with the August 2 deadline (the date the government hits up against the debt ceiling) approaching quickly. More than one source used the word "distraction" in conversation.

Me? I suspect both arguments are right.

The Gang of Six proposal has a lot to recommend it. It would reduce the deficit substantially, by nearly $4 trillion over the next ten years. And it would do through cuts to both discretionary spending and entitlement programs that, although surely painful, are more carefully designed than the reductions in some of the other plans getting attention in Washington. As far as I can tell, the program integrity of Medicare, Medicaid, and Social Security would remain intact. 

More important, and more conspicuously, the plan raises more than $1 trillion in new revenue. As Robert Greenstein of the Center on Budget and Policy Priorities notes, it's actually more than the president has been advocating recently. I’d like to see more revenue still. (If we let all of the Bush tax cuts expire, we'd get it.) But given how this debate has been unfolding, a deal that generates this much money in revenue, both in absolute and relative terms, may be the best possible alternative.

The plan has its drawbacks, too. For one thing, it's not exactly a "plan." It's more a framework, with key and controversial details still to be filled in. It calls for the repeal of CLASS, the long-term care insurance program that's part of the Affordable Care Act. And it includes no efforts to boost job growth in the short term. While negotiations at the White House were taking place last week, extensions of unemployment insurance and a payroll tax holiday were very much part of the conversation. The Gang of Six plan has no such provisions.

But the biggest problem with the plan is that its architects didn’t introduce it six weeks ago, when it could have been a foundation for negotiation. As my colleague Jonathan Chait observes, the proposal suffers from the same political drawback as every other reaonable-sounding bipartisan plan: The revenue that makes it appealing to people like me makes it a non-starter with House Republicans. And while it’s not inconceivable that leaders from the two parties could figure out some way to pass a plan like this, they would need time -- and that’s the one thing they do not have now. As one source close to the negotiations explained on Tuesday:

Do you think the House is prepared to accept $1 trillion in tax increases? It’s a distraction at this point which makes it harder to do what we we have to do -- avoid default. Hey, I’m all for romantic endings, but at this point I’d just rather not get blown up.

Senate Majority Whip Dick Durbin, a member of the Gang, noted that the plan was very much a set of “starting concepts” -- and perhaps that’s the best way to think about it. Conversations about how to reduce the deficit probably won’t end when the president and Congress agree on a debt ceiling deal. That’s particularly true if the final agreement postpones the big debates, and the big savings, by creating a new commission to address them. Such a commission could make good use of the Gang of Six plan, or elements of it.

But first we have to get past August 2. And it’s not clear this plan actually makes that easier.