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VOL. 35 | NO. 29 | Friday, July 22, 2011

GOP retools plan as Congress seeks debt fix

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WASHINGTON (AP) — Six days away from a potentially calamitous government default, House Republicans appeared to be coalescing Wednesday around a work-in-progress plan by House Speaker John Boehner to increase the U.S. borrowing limit and chop $1 trillion in federal spending. But the White House dismissed the proposal as a waste of time, and it got a thumbs-down from Senate Democrats and tea party activists, too.

It was a telling illustration of the difficult politics along the pathway to a deal in a standoff that has put financial markets on edge. Stocks were falling sharply Wednesday.

GOP leaders worked to line up support for Boehner's proposal, which was being retooled after nonpartisan analysts in the Congressional Budget Office said it would cut spending less than he had estimated — about $850 billion over 10 years rather than $1.2 trillion. The House planned to vote on the reworked plan Thursday, with Boehner calling it "the best opportunity we have to hold the president's feet to the fire."

White House spokesman Jay Carney dismissed all the focus on the GOP plan as a distraction.

"Why are we voting on measures that have no chance of becoming law?" he asked with exasperation. Carney said lawmakers should stop looking for an easy way out of the debt crisis.

"People keep looking for off-ramps," he said. "They don't exist."

Rep. Mike Rogers, R-Mich., said Republicans were gravitating toward Boehner's plan "in a big way." He and others cited changes being made in the bill to make sure spending cuts exceed added borrowing authority, and the fact that the House would soon vote on a balanced budget plan.

Senate Republican Leader Mitch McConnell said only Boehner's plan would resolve the crisis "in a way that will allow us to avoid default without raising taxes and to cut spending budget gimmicks."

But Senate Majority Leader Harry Reid, D-Nev., dismissed the speaker's plan as a short-term measure that would leave the economy on shaky ground. He said it would not get one Democratic vote in the Senate, dooming it to failure and was merely "a big wet kiss for the right wing."

"It's not Democrats who have asked for a long-term solution," Reid said. "It's the economy. The economy has demanded it."

Reid was asked if there was a "drop-dead date" for a deal to pass the House, be amended by the Senate and reach President Barack Obama in time to avoid default.

"Magic things can happen here in Congress in a very short period of time under the right circumstances," he said.

Boehner's proposal caught criticism not just from Democrats but from the right as well.

Tea party activists gathered across the street from the Capitol on Wednesday and urged Boehner to reject any deal that doesn't include steep spending cuts — even if the U.S. defaults.

Tea Party Nation, one group within the loosely affiliated movement, issued an online call for Boehner to step down. But other tea party activists said the speaker needs time to strike a good deal. Tea Party Express strategist Sal Russo said that while Boehner was trying to "salvage some small steps to fiscal responsibility, we believe his proposals lack sufficient progress in getting America's economic future on a better footing."

Reid's rival proposal would deliver budget savings of a little more than $2 trillion, a half-trillion less than promised but still more than under Boehner's plan, budget analysts reported. The Senate leader said he'd wait to see what the House did before bringing his plan to a vote.

House Democrats, for their part, focused on finding a fallback plan should the two sides fail to raise the debt ceiling before the government runs out of borrowing authority next week.

 Rep. James Clyburn, a member of the Democratic leadership, said he told fellow Democrats that Obama should veto the House GOP plan for a short-term extension of the debt ceiling and invoke the Constitution's 14th Amendment, which says that the validity of the nation's public debt "shall not be questioned."

 The White House has rejected resorting to this tactic, questioning its legality. But Democratic Caucus chairman John Larson said that with only days left before Treasury's borrowing authority lapses, "we have to have a failsafe mechanism."

Amid all the heated rhetoric, it was easy to miss the fact that the differences between the sides actually seemed to be narrowing.

Boehner's plan represents significant movement from a bill the House passed last week, this one requiring less of the long-term spending cuts that had made Democrats balk. And Reid no longer is insisting on having tax increases, anathema to Republicans, as part of any plan to cut deficits.

Boehner needs to do more than pump up the legislation, however. He has to shore up his standing with tea party-backed conservatives demanding deeper spending cuts to accompany an almost $1 trillion increase in the government's borrowing cap.

But Rep. Alan West, R-Fla., said Wednesday that Boehner's bill was picking up support even among conservatives.

"Nancy Pelosi, Harry Reid and President Obama are going to be surprised tomorrow night," he said. "I'll bet my retirement check on it. I'm a conservative. I'm going to support this."

Rep. Bill Huizenga, R-Mich., said he remained undecided, but predicted that the reworked Boehner plan was "about as good as it's going to get. That's a pretty strong argument."

Unless he can wrestle the situation under control, Boehner risks losing leverage in his dealing with Obama and the Democrats who control the Senate.

Reid said Boehner's original plan was destined to fail in the Senate and it drew a White House veto threat. But it was nevertheless framing the debate over how to reduce long-term deficits while raising the debt ceiling.

Tuesday's CBO analysis said the GOP measure would cut the deficit by about $850 billion over 10 years, not the $1.2 trillion originally promised. Even more embarrassing was a CBO finding that the measure, which would provide a $900 billion increase in the nation's borrowing cap, would generate just a $1 billion deficit cut over the coming year.

Boehner's plan would couple budget savings gleaned from 10 years of curbs on agency budgets with a two-track plan for increasing the government's borrowing cap by up to $2.7 trillion. The first increase of $900 billion would take effect immediately; the second could be awarded only after the recommendations of a special bipartisan congressional panel were enacted into law.

The White House says Boehner's measure would reopen the delicate and crucial debt discussions to unending political pressure during next year's campaigns and risk more uncertainty in the markets.

Reid's plan, which would increase the debt limit enough to keep the government afloat past the 2012 elections, could emerge as the last viable option standing and could be modified with input from Republicans.

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