In short, neither Reid's or Boehner's plan do enough to reduce America’s debt, and neither would address the concerns raised by the credit rating agencies.
America Needs a Better Solution
By Heritage Foundation Mike Brownfield——Bio and Archives--July 26, 2011
Americans tuning in last night to watch President Barack Obama’s primetime address from the East Room of the White House might have thought they stumbled upon yet another re-run from the networks. Instead of hearing news that Washington finally broke the debt ceiling stalemate, viewers were treated to more of the same from their President. He still had no plan for dealing with government overspending and overborrowing, and he repeated his never-ending call for tax hikes. Unfortunately, the plans proposed by House Speaker John Boehner (R–OH) and Senate Majority Leader Harry Reid (D–NV) don’t get the job done, either.
The President’s speech came as America stands at a fiscal precipice, with just a week to go before the August 2 deadline to raise the debt ceiling. Though the credit rating agencies see America’s risk of default as small (though increasing), there remains the other, more serious risk–the failure to do enough to bring down debt in order to avoid a downgraded credit rating. Standard and Poor’s warns that Congress and the Administration:
[Might] agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”
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