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New debt plan put forward

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CNY/NNY/S. Tier: New debt plan put forward
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Two Washington heavyweights offer a new plan to reduce America's debt. The report by Alan Simpson and Erskine Bowles comes as mandatory spending cuts loom over Congress. YNN's Michael Scotto has more.


President Obama didn't mince words Tuesday morning, looking to place the blame for the deadlock squarely on Republicans.

Surrounded by first responders, the President said a series of automatic spending cuts, known as the sequester, would result in layoffs that would lead to diminished public safety and government services.

The President once again said the sequester can be avoided if Republicans agree to a plan that includes raising taxes on the wealthy

“Republicans face a simple choice. Are they willing to compromise, to protect vital investments in education and public safety and all the jobs that depend on them or would they rather put our economy and hundreds of thousands of jobs at risk just to protect a few of the wealthiest Americans and corporations,” said President Obama.

And that really is the sticking point. Republicans, at this point, refuse to reduce the deficit by closing loopholes on the wealthy, unless tax rates are also reduced.

In a statement, House Speaker John Boehner said:

“Once again, the President offered no credible plan that can pass Congress - only more calls for higher taxes. Just last month, the President got his higher taxes on the wealthy, and he’s already back for more.”

Earlier Tuesday, the bipartisan deficit cutting duo of Simpson and Bowles hoped to jumpstart negotiations by coming out with a new plan that would reduce the deficit by $2.4 trillion over ten years, through a mix of spending cuts and tax increases.

They said that even if the sequester takes effect in 10 days, it might not last long once the public starts feeling the impact.

"When you guys have to go out here to Reagan Airport and wait in line three hours to get through security, you're gonna be pissed and so is everybody else. And you could use lots of different stories just like that. And when that happens, they're gonna come back to Congress and say, ‘We're sick of this intransigence,’" said Erskine Bowles, former Clinton White House Chief of Staff.

The sequester is scheduled to take effect a week from Friday, and with Congress out on recess this entire week, it's looking more and more likely that those automatic spending cuts will take effect.

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