July 20th, 2011
11:14 AM ET

CFR.org Roundup: Obama supports "Gang of Six" deficit plan

Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.

President Barack Obama expressed his support for a deficit-reduction plan put forth by the bipartisan "Gang of Six" senators (BBC), reported to include a blend of new revenues and cuts to military and social spending to reduce the nation's budget deficit by about $3.7 trillion over the next decade. Meanwhile, conservative lawmakers in the House of Representatives passed a "cut, cap, and balance" plan that calls for steep spending cuts, a cap on future spending as a percentage of GDP, and an amendment to the Constitution requiring a balanced budget. Analysts say the bill is a symbolic gesture with no chance of becoming law.

The "Gang of Six" plan may inject new energy into Obama's attempts to achieve a broad deficit reduction compromise (FT) ahead of August 2, after which the government will default on its financial obligations. The bipartisan plan has a good chance of passing the Senate, but it remains to be seen whether it can survive a vote in the House, where conservatives have balked at increasing the government's revenue.

While some suggest the plan has little chance of passing intact (WSJ), other analysts say several components of the deal could be incorporated into a final package. The progress in negotiations is fragile, however, and lawmakers are wary things could easily fall apart in the next few weeks. Others claim there may not be enough time to finalize any legislation prior to the deadline (NYT).

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As the debt-ceiling deadline looms, political wrangling has escalated, but lawmakers are likely to cobble together an agreement that avoids default, says this CFR Analysis Brief.

In this op-ed for the Washington Post, James M. Lindsay writes that a failure to raise the nation's debt ceiling could inflict significant and unnecessary harm to America's ability to wield and project its power in the world.

This article from the Economist discusses the theory of political compromise regarding the debt/deficit negotiations, and presents eight reasons to wonder whether the presumption of a deal is true or not.


As the United States approaches the deadline to raise its debt limit, economists warn of a fiscal crisis and higher borrowing costs for U.S. businesses and homeowners.

MIDDLE EAST: Syria Fires on Funeral in Homs

Syrian security forces are reported to have fired on a funeral procession in the restive city of Homs (BBC), killing some ten people, according to activists. Human rights groups claims dozens have been killed in the city since the weekend.

On his CFR blog Pressure Points, Elliott Abrams writes that the Obama administration's policy toward Syria "has moved from 'improvisation' to incoherence."

Iran: Iranian officials claim to have shot down a U.S. unmanned drone hovering over the Fordu nuclear site (Reuters). The report comes just a day after Tehran confirmed it was installing new uranium enrichment centrifuges.

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PACIFIC RIM: Chinese Police Kill Rioters in Xinjiang

Chinese officials announced that security forces shot fourteen rioters (Xinhua) who allegedly attacked a police station in the Xinjiang Uygur autonomous region. A Communist party spokesman said four people were killed in the violent exchange.

Japan: Japanese authorities say they cannot rule out the possibility that beef contaminated with radiation (Bloomberg) has been exported. The government issued a ban on beef shipments from areas surrounding the Fukushima power plant after finding hundreds of cattle that had been fed tainted hay.

SOUTH AND CENTRAL ASIA: Pakistan Accused of Covert Lobbying

The FBI announced allegations that Pakistan's military, including its ISI intelligence agency, has engaged in a covert campaign to influence U.S. foreign policy (NYT) and elections. The accusations accompanied indictments of two U.S. citizens charged with failing to register as agents of Pakistan, as required by law.

Cuts in U.S. military aid to Pakistan only have a chance to translate into greater cooperation if they're part of a larger strategy, including a U.S. crackdown on Pakistan-linked militants in Afghanistan, says CFR's Daniel Markey.

Afghanistan: NATO forces are set to hand over authority of the Afghan city of Lashkar Gah, the third area released to the country's national security forces. The city is the capital of Helmand province (CNN), widely viewed as the most hostile of the first seven regions to be transferred.

Did President Obama's troop drawdown plan for Afghanistan undercut the campaign against the Taliban or was it too limited to meet U.S. goals? CFR President Richard N. Haass and Senior Fellow Max Boot offer differing takes on the new battlefield deployment.

AFRICA: UN Declares Famine in Somalia

The United Nations announced that two regions of southern Somalia have been struck by famine (AFP), a plight affecting some 350,000 people. The stricken areas, controlled by al-Qaeda-inspired al-Shabaab insurgents, have endured persistent drought and ongoing conflict in the past few years.

Global food prices are being driven up by a number of factors, including bad weather, low stocks, and unstable commodities markets. Combating price volatility and protecting food security will take increased agriculture production and better food distribution, experts say.

Malawi: Opposition and civil society groups in Malawi are set to protest repressive media laws, fuel shortages, and poor economic governance. The planned demonstrations have prompted fears thegovernment of President Bingu wa Mutharika (allAfrica) may resort to violent suppression.

AMERICAS: WTO Sides with Mexico in Tuna Dispute

The World Trade Organization (WSJ) sided with Mexico in its long-running battle with the United States over whether its tuna is "dolphin safe." The decision, which can be appealed by U.S. officials, moves Mexico one step closer to being able to export yellow fin tuna to the United States after a ban in 1991.

EUROPE: Cameron Addresses Parliament amid Hacking Scandal

British Prime Minister David Cameron addressed MPs (CNN) over his hiring of former News of the World editor Andy Coulson. Critics say Cameron's decision to employ Coulson presented the prime minister with a conflict of interest when police began investigating allegations of the illegal phone hacking.

Germany: French President Nicolas Sarkozy is set to travel to Berlin for a last-minute meeting with German Chancellor Angela Merkel to discuss a deal on a second Greek bailout (FT). The bilateral negotiations come just prior to a scheduled meeting of the so-called "European working group" in Brussels.

Greece will undoubtedly receive a second bailout from the EU and IMF. But expert Daniel Gros says it remains to be seen whether default is inevitable and if banks and other private bondholders will also take a hit.

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Topics: Daily Roundup • Economy • Politics • President Obama • United States

soundoff (7 Responses)
  1. Juan Viche

    would love to know if this is a legitimate solution. has anyone made any phone calls?

    July 20, 2011 at 1:46 pm | Reply
    • Palchy

      The House Plan Is The Compromise!

      How is it that cutting spending & balancing the budget to increase the debt ceiling is not a compromise? How did the debate NOT center on the fact that the debt ceiling is going to be raised? Not compromising on the debt ceiling would be to refuse to raise the debt ceiling AT ALL like then Senator Obama did in 2006. Cutting expenditures alone to meet obligations outright is the hard-line position in my view. So yet again – the left has been allowed to frame the debate on their terms.

      How did one trillion dollars of increased tax revenue become part of the discussion? 100 Billion dollars per year added to the baseline of federal revenue. This is on top of the massive Obamacare taxes coming soon. Of course they will not get the 100B because this figure is arrived at through static analysis. They will get half of that at best. But the consequence of the attempt to confiscate these new taxes will have real impact. Those affected will change their behavior to avoid the increased taxes as is always the case. This will result in loss of jobs as was the case in the early 1990's when President Clinton targeted the luxury yacht industry.

      This time, to spread the misery around, it is the private aviation industry & oil companies that are the targets. As a result there will be fewer private jets flying with less frequency and higher fuel prices. You can bank on it. Meanwhile the actual revenue to the government from these new taxes doesn't even make a dent in the problem. It is merely a symbolic political point to the liberal (with other people’s money) base.

      July 20, 2011 at 2:14 pm | Reply
    • j. von hettlingen

      Yes, Obama called on leaders in the House and Senate from both parties to start "talking turkey" and stopped "playing chicken".

      July 20, 2011 at 5:25 pm | Reply
      • j. von hettlingen

        please read – STOP "playing chicken".

        July 20, 2011 at 5:32 pm |
  2. T. Gallegos

    Regarding: President's speech and budgets proposals. I don't believe that we as the public would ever be in a position to fully understand the ramifications of either parties budget plan before it is implemented–further, I believe that we are not meant to, so why attempt to! More disturbing to me than the budget proposals put forward by either the Ds or Rs is the Lack of Leadership exhibited by both parties to include the President. I'm in favor of establishing a fourth party–the party of the "disillusioned" for their numbers are growing by the millions. I'm reasonably certain we could find the leadership and intelligence among this party that can figure a way out of this mess we are in and do what is best for this Nation because what we presently have for political parties/leaders is not working for us the public. I will not be calling anyone on behalf of the President!

    July 26, 2011 at 9:08 pm | Reply
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