Congress stalled on debt ceiling proposals

Speaker of the House John Boehner (R-OH) (R) and House Majority Leader Eric Cantor (R-VA) (L), listen to questions during a press conference following a meeting at the Republican National Committee offices July 26, 2011 in Washington, DC.
Speaker of the House John Boehner (R-OH) (R) and House Majority Leader Eric Cantor (R-VA) (L), listen to questions during a press conference following a meeting at the Republican National Committee offices July 26, 2011 in Washington, DC. Win McNamee/Getty Images

With the clock ticking down, Congress appeared no closer to a deal to raise the debt ceiling Wednesday as Republican and Democratic leaders worked to sell lawmakers on their competing plans.

House Speaker John Boehner (R-OH) said he would rewrite his proposal to include more cuts after the nonpartisan Congressional Budget Office said late Tuesday that the measure would reduce spending less than advertised. GOP leaders postponed a House vote on the plan but expected to reschedule it for Thursday.

On Wednesday, the CBO said a rival plan from Senate Majority leader Harry Reid (D-NV) also fell short of its goal, but certified that it would reduce deficits by twice as much as the Boehner's plan.

In a letter to Reid, the CBO said the Senate plan would reduce budget deficits by about $2.2 trillion between 2012 and 2021. In a similar letter to Boehner, the CBO said his plan would reduce deficits by $850 billion over the same period.

But both plans fell short of what was advertised: Republicans had promised $1.2 trillion in cuts, while Democrats said they could reduce deficits by $2.7 trillion.

The Democrats' plan would cap discretionary spending, put separate limits on war funding and "enhance compliance with tax laws," which some Republicans have branded a tax increase. Their plan also would raise the national debt limit would have to be increased by $2.7 trillion.

The latest proposal from Republicans would raise the debt ceiling by $2.5 trillion and includes the same cap on discretionary spending, but it has no provision for increasing tax revenues.

Boehner has been struggling to assuage tea party-backed conservatives, who have threatened to oppose any plan that raises taxes or doesn't cut spending deeply enough. Democrats have insisted that raising revenues is a key part of any proposal to lower the deficit.

"We need more drastic cuts," said Tea Party-backed Rep. Jason Chaffetz (R-UT). "I can't support it in its current form."

Rep. Tom Cole (R-OK), speaking to NPR on Wednesday, acknowledged that getting a plan passed would be challenging, but that "the great majority of the [Republican] conference is actually behind what the Speaker proposes."

"The big difference between the Reid plan and the Boehner plan is, look, the Reid plan is based on a trillion dollars-worth of savings because the Iraq and Afghan war, presumably, will end," he said. "That's true enough, but those aren't real savings. That's money nobody was ever planning to spend in the first place."

It's not clear that either plan could make it through both chambers of Congress or, in the case of the GOP measure, avoid a threatened presidential veto.

President Obama's chief of staff, Bill Daley, told NPR on Wednesday that Boehner faces political realities in his party that "he's got to deal with, as does the president."

Daley said Obama, like Boehner, has gotten "enormous blowback" from his supporters in agreeing to some painful cuts. But he said the president "was willing to take that criticism because he believed that a deal that strengthened Medicare, strengthened Medicaid and was balanced was the right approach.

Reid held off forcing a vote on his competing measure, which was unveiled Monday to poor reviews from Republicans such as Senate Minority Leader Mitch McConnell of Kentucky.

"We believe the Reid proposal is not a serious effort to address deficit and debt and should be defeated," McConnell said early Tuesday. Later, he said he would be "prepared to accept something less than perfect, because perfect is not achievable."

If Congress can't get a deal done, lawmakers could opt to raise the debt ceiling by $1 trillion to keep the government fully functioning past Tuesday's deadline to continue the government's borrowing powers and avert possible defaults on U.S. loans and obligations – such as $23 billion worth of Social Security payments due the next day.

The Capitol's phone lines and websites were jammed after Obama urged the public to contact their representatives in his Monday night address.

Even if Congress manages to cobble together something that defers default for several months, the credit rating agencies might still decide that isn't enough. Without a longer-term plan to reduce the underlying deficit, those private agencies, such as Moody's and Standard & Poor's, could choose to downgrade U.S. debt.

"If you have a second rate credit rating it means in the eyes of the world you're a second rate country," said Jim Kessler, vice president for policy at Third Way, a progressive advocacy group.

Kessler said Republicans are "very reluctant to do something big here because ... there is no doubt [that] something big does help the president" in the 2012 campaign.

A former House Republican leadership aide, John Feehery, said the Democrats might also prefer a smaller deal that preserves their ability to attack Republicans on Medicare and Social Security.

"A big deal screws up a lot of campaign commercials," he said.

NPR's Mara Liasson and David Welna contributed to this report, which contains material from The Associated Press.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

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