A new House Republican proposal to raise the federal debt ceiling was met with deep misgivings Monday by conservatives who consider its spending cuts insufficient, leaving Congress at a standstill a week before the government risks its first default.
As House Speaker John A. Boehner (R-Ohio) tried to rally support for his two-step plan to cut $3 trillion in spending, Senate Majority Leader Harry M. Reid (D-Nev.) offered a strikingly similar proposal for increasing the debt limit before the Aug. 2 deadline. The two leaders, however, remained bitterly divided over Boehner's demand to hold another vote next year to further expand the government's borrowing authority.
With financial markets warily watching the Capitol Hill drama, President Obama gave a national address at 9 p.m. Monday to urge common ground on a proposal.
"We're left with a stalemate," Obama said during his speech, after a renewed push for his "shared sacrifice" plan of increased taxes on the rich. He warned of an "economic crisis, this one caused almost entirely" by the federal government. He said he remains opposed to Boehner's approach for "kicking the can down the road" in terms of setting the proper fiscal course.
The government has exceeded its $14.3 trillion debt limit, and Treasury Secretary Timothy F. Geithner has said that without action by next Tuesday, the government will not be able to pay its bills. Credit-rating firms warned that they could downgrade the U.S. debt, which could spur higher interest rates and cause aftershocks in global markets.
Absent an agreement between Boehner and Reid, the House and the Senate are headed for a high-wire act this week.
Neither leader was certain that he could rally the votes to win. With few House Democrats expected to support his approach, Boehner would need to win an overwhelming majority of his 240-member conference.
But those hopes were rocked Monday when Rep. Jim Jordan (Ohio), who leads a conservative caucus of more than 170 GOP members, announced his opposition. Jordan, head of the Republican Study Committee, has insisted that the debt ceiling be increased only in return for Congress sending a constitutional amendment requiring a balanced budget to the states for ratification.
Reid's measure faces its own hurdles because Republicans criticize some of his savings as accounting tricks. So Reid continued private talks with Senate Republicans in an effort to modify Boehner's package to make it more palatable to Obama, who has previously said he would veto any proposal that provided only a short-term increase in the debt ceiling.
Both plans call for deep cuts to federal agencies over the next decade, and neither would immediately require increased tax revenue or deep cuts to entitlement programs, such as Medicare. Reid's plan would actually cut more from the federal budget over the next decade than Boehner's but does not require a second vote to raise the debt limit next year.
Boehner's plan includes an immediate increase in the debt ceiling of up to $1 trillion paired with $1.2 trillion in cuts to federal spending over the next decade. A new bipartisan committee of 12 lawmakers would then be directed to come up with an additional $1.8 trillion in deficit savings and send its recommendations to Congress for fast-track approval without any amendments allowed.
If such a plan were approved, Obama could request up to $1.5 trillion in new borrowing authority early next year, and Congress could block it only with a two-thirds majority in each chamber.
The Reid bill also includes upfront spending cuts that would exceed the size of the proposed increase in the debt ceiling. This approach, too, would create a 12-member committee with the job of producing a broad strategy for reducing the deficit by the end of the year.
Although both bills propose to reduce agency spending, including $1.2 trillion at the Pentagon over the next decade, the Reid bill would include an additional $1.5 trillion in debt reduction.
The Boehner and Reid approaches differ over how much the debt limit would be increased. Boehner's bill would give the Treasury only about $1 trillion in additional borrowing authority — enough to pay the bills through February or March. This would guarantee another fight over government borrowing in the middle of the 2012 presidential campaign. The Reid measure, by contrast, would raise the debt ceiling to $17 trillion, postponing the next battle until at least 2013.
If the Boehner bill passed the House, Senate Democrats might use the legislation as the basis for raising the debt ceiling. They were continuing Monday to work with Minority Leader Mitch McConnell (R-Ky.) on ways to modify the proposal, Democratic aides said. If the Boehner measure failed, Senate Democrats would push for their own measure.
On Monday, anxiety hung over several closed-door party caucuses across the Capitol.
After a 75-minute briefing Monday afternoon, rank-and-file Republicans exited a basement room at the Capitol with mixed reviews for Boehner's approach. He can count on a core group of at least 100 longtime GOP members, lawmakers said.
Many Republicans, particularly among the 87 freshmen, said they need more time to process the complex details of a proposal that would set up a handful of votes over the next six months.
"I think there are some very interesting parts, and the bill has not been put in print yet, and until it's put in print, I don't know that I can say one way or the other," said Rep. Diane Black (Tenn.), whom GOP leaders often point to as a favorite among the newcomers.
Asked Monday if his plan could win enough Republican votes, Boehner shrugged and deferred to House Majority Whip Kevin McCarthy (Calif.).
"We ask all Democrats that want to join with us to put this House on the right path, that they could join with us on this bill," said McCarthy, the party's top vote counter.
Democrats, in turn, are urging Republicans to back Reid's approach, saying GOP members have previously supported every item in the package. Among these are $100 billion in savings identified during bipartisan talks led by Vice President Biden, including up to $15 billion in cuts to farm subsidies and $40 billion from reducing fraud and abuse in government programs. There also is $400 billion in savings from reduced interest payments on a lower national debt and $1 trillion from winding down the wars in Iraq and Afghanistan.
House Republicans have been reluctant to count war savings in talks over the debt limit, but Democrats note that House Budget Committee Chairman Paul Ryan (R-Wis.) included those savings in the budget blueprint that passed the House this year.
Still, a Ryan spokesman dismissed the Reid proposal.
"An honest budget cannot claim to save taxpayers' dollars by cutting spending that was not requested and will not be spent," Conor Sweeney said in an e-mail. "Senate Democrats are employing a budget gimmick that will not fool the credit markets."
But Reid said his proposal represents the only option for pushing a debt-limit increase through Congress — and getting it signed by the president.
"This isn't a game of chicken. This is a game of reality," Reid told reporters. "We're about to go over a cliff."