The plan is 'broadly consistent with the approach that I’ve urged,' President Obama said. | REUTERS Obama praises 'Gang of Six' plan

President Barack Obama hailed a proposal offered Tuesday by Republican and Democratic senators as “a very significant step” that represents “the potential for bipartisan consensus” on resolving the impasse over cutting the deficit and lifting the debt ceiling.

But reality quickly settled in, as House Republican leaders expressed skepticism, Senate leaders were noncommittal and rank-and-file members of both parties questioned whether it just is too late to pull everything together.


The president appeared in the White House briefing room hours after the “Gang of Six” briefed senators on its plan to cut the deficit by $3.7 trillion over 10 years, in part by raising $1 trillion in new revenue. Obama’s decision to align himself with the Senate package aims to further marginalize House Republicans, who have resisted any debt plan that includes new revenues.

“We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts, 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 said. “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 introduction of a bipartisan deficit-cutting plan, which was negotiated over the past seven months, revived hopes yet again of striking a “grand bargain” ahead of the Aug. 2 deadline to raise the debt limit.

But with only two weeks remaining, its late entry into the debt negotiations could derail the proposal.

Senate Majority Leader Harry Reid (D-Nev.) told reporters Tuesday that it could take two weeks simply for the Congressional Budget Office to return a cost estimate on any kind of significant budget package.

Minority Leader Mitch McConnell (R-Ky.), who was never thrilled about the Gang of Six deliberations, said he hasn’t “had a chance to decide how I feel about it.”

And early reaction from the House GOP, the linchpin to any deal, wasn’t promising.

The House leadership staff was reviewing the plan but had already expressed some concerns, aides said. They need more details on how the proposal achieves $3.7 trillion in savings, and want more significant changes to Medicare and Medicare, the aides said.

Already, there were efforts to brand the plan as containing tax increases — a label that could kill the proposal in the House — even though the group claims its proposal would result in a $1.5 trillion net tax decrease by repealing the alternative minimum tax and lowering tax rates.

“I would have a problem with a trillion dollars in new revenue,” Ways and Means Chairman David Camp (R-Mich.) said Tuesday.

But Camp didn’t entirely rule out the proposal, saying “I don’t want to give it the back of my hand before I get a chance to read it.”

Obama said he is still open to the fallback plan proposed by McConnell to allow the president to raise the debt ceiling as a “failsafe” if a broader deal can’t be reached.

“Our attitude is that that continues to be a necessary approach to put forward, in the event that we don’t get an agreement, at minimum we’ve got to raise the debt ceiling,” Obama said. “That’s the bare minimum that has to be achieved, but we continue to believe that we can achieve more.”

The House is set to vote Tuesday afternoon on “Cut, Cap and Balance,” a plan that gets strong support among conservative Republicans but is opposed by Democrats and is seen as unable to pass the Senate.

After the votes, Obama said he will call Boehner and other congressional leaders back to the White House for the first formal talks since Thursday.

“Hopefully, we’ll be able to report on some additional progress over the next few days,” Obama said.

He said Congress and the White House are now in “the 11th hour and we don’t have a lot more time left.”

“It’s very important in these next couple days to understand we don’t have any more time to engage in symbolic gestures, we don’t have any more time to posture,” he said.

In all, Obama said, the Gang of Six plan amounts to “an approach in which there is shared sacrifice and everybody is giving up something.”

The plan is, he said, “broadly consistent with the approach that I’ve urged: what it says is we’ve got to be serious about reducing discretionary spending, both in domestic spending and defense, we’ve got to be serious about tackling health care spending, and entitlements in a serious way, and we’ve got to have some additional revenue.”

According to a copy of a summary of the Gang of Six plan, the group would impose a two-step legislative process that would first make $500 billion worth of cuts immediately, then create a “fast-track process” that would propose a comprehensive bill aimed at dramatically restructuring tax and spending programs. The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the deficit reduction measures on the floor.

The $500 billion in cuts would come from a range of sources, including shifting to a new consumer price index to make cost-of-living adjustments to Social Security. The plan would impose statutory spending caps through 2015, freeze congressional pay and sell unused federal property.

To enact a comprehensive deficit plan, the group calls for existing congressional committees to report legislation within six months that would “deliver real deficit savings in entitlement programs over 10 years,” the plan says.

The Senate Finance Committee would be instructed to deliver “real deficit savings” through simplifying the tax code and raising as much as $1 trillion in revenue. It would do this by establishing three tax brackets with rates of 8-12 percent, 14-22 percent and 23-29 percent. It would permanently repeal the $1.7 trillion Alternative Minimum Tax, which was initially enacted to prevent the wealthy from using tax loopholes to avoid paying income tax but has since affected millions of middle-income families. And it calls for establishing a single corporate tax rate, between 23 percent and 29 percent.

The group punts many of the specifics to other committees, which would be asked to find savings in discretionary and mandatory spending. This includes: $80 billion out of Armed Services; $70 billion out of Health, Education, Labor and Pensions; $65 billion out of Homeland Security and Government Affairs; $11 billion out of Agriculture; $11 billion out of Commerce; and $6 billion out of Energy and Natural Resources.

The Judiciary Committee would be asked to find savings through medical malpractice reform.

The Gang of Six, which included three Republicans and three Democrats, outlined the plan to 47 senators, including 23 GOP members — a show of bipartisanship that has been lacking recently on the Hill.

“These are six colleagues of ours who span the left to the right,” said Sen. Joe Lieberman (I-Conn.) after he left the meeting. “It begins to get our country back to fiscal balance."

Manu Raju, Jon Allen and Jake Sherman contributed to this report.