House Republican leaders this afternoon are set to show their rank and file a new plan to raise the debt ceiling by about $2.8 trillion in two installments, with cuts that exceed the increase in the borrowing limit and no new tax increases.
According to a top GOP aide, the plan would cut and cap discretionary spending immediately and save $1.2 trillion over ten years. The debt ceiling would be raised by "up to $1 trillion."
It would impose caps on future spending that, if exceeded, would trigger automatic cuts across all programs.
The plan also calls for the House and Senate to vote on a balanced budget amendment before the end of the year, but after October 1, 2011, in order to allow time "to build sufficient support for this popular reform."
Finally, the plan calls for the creation of a bipartisan congressional committee that would be required to write legislation that would slash the deficit by "at least $1.8 trillion over 10 years."
Both the House and Senate would be required to vote on this proposal next spring without amending it and if it passes, then President Obama would be able to raise the debt ceiling by approximately $1.6 trillion.
Republicans believe this plan can attract enough votes to pass both the House and the Senate. It embodies some of the principles of the House GOP's "cut, cap and balance," plan that failed to pass the senate.
But the plan won't appeal to all fiscal conservatives.
The Heritage Foundation, a conservative think tank, wants not debt limit increase unless the deal includes "historic reforms" that would reduce spending and debt. Heritage put out a statement Monday saying they are reviewing the plan but so far "are skeptical this proposal rises to the occasion."
House Republicans said their goal is to vote on their new plan by Wednesday, but that will depend upon how quickly the nonpartisan Congressional Budget Office can analyze the cost, as most members won't agree to vote on it without an official CBO price tag.