GOP Retools Plan as Congress Seeks Debt Fix

By Biodun Iginla, BBC News

Published: July 27, 2011 at 12:04 PM ET

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WASHINGTON — Six days away from a potentially calamitous government default, House Republicans on Wednesday appeared to be slowly coalescing around a plan by House Speaker John Boehner to avert the debt crisis — a plan Boehner was still retooling to increase its complement of spending cuts. But Senate Democrats insisted the short-term solution Republicans were crafting would leave the economy on shaky footing.

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Each side claimed the moral high ground as a new day of jockeying over to how to end the debt crisis began. And budget analysts suggested both sides had been over-promising how much in spending cuts their rival plans would deliver.

Boehner, R-Ohio, set out to rework his plan after nonpartisan analysts from the Congressional Budget Office said it would cut spending less than advertised — about $850 billion over 10 years rather than the $1.2 trillion initially promised. GOP leaders planned a House vote Thursday on the reworked plan.

"We're moving in his direction in a big way today," Rep. Mike Rogers, R-Mich., said of Boehner's plan. Rogers and others cited changes being made in the bill to make sure spending cuts exceed added borrowing authority, and the fact that the House will 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."

A rival proposal offered by Senate Majority Leader Harry Reid, D-Nev., would deliver 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.

Reid said Boehner's original plan was so weak that it "didn't even have the support of Republicans in his own chamber."

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

House Democrats, for their part, said Obama should invoke a little-known constitutional provision to prevent the nation from going into default if Congress fails to come up with a plan to raise the debt ceiling.

Rep. James Clyburn, a member of the Democratic leadership, said he told fellow Democrats on Wednesday that Obama should both veto the House GOP plan for a short-term extension of the debt ceiling and invoke the 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 to keep the nation from defaulting. 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, the differences between the sides were 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. Many conservatives already had promised to oppose it.

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."

"It's much less than I would like," said Rep. John Fleming, R-La., but he said he doubted Republicans would get the spending cuts they want "until we get a new president. So I'm willing to take something less than I would otherwise."

Several lawmakers leaving the meeting said there was clear momentum for Boehner.

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

Boehner's original plan was not winning converts among some stalwart conservatives. It prompted Reid to declare that the bill 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 increase could be awarded only after the recommendations of a special bipartisan congressional panel are 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 promised that Boehner's measure would never make it through the Democratic-controlled Senate.

Reid held back on forcing a vote on his competing measure, which he unveiled Monday to poor reviews from Republicans, including McConnell of Kentucky. Reid appears to hope that his measure, which promises $2.7 trillion in spending cuts and 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.

Those same Republicans blasted Reid's bill for $1 trillion in war-related savings, calling the projections phony.

One area of potential compromise could be how to treat the findings of a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid. Both Reid and Boehner support the idea, though Boehner wants to make a future increase in the debt limit contingent on the proposed additional cuts being enacted into law.

Meanwhile, the clock was ticking down to next Tuesday's deadline to continue the government's borrowing powers and avert possible defaults on U.S. loans and obligations, like $23 billion worth of Social Security payments due Aug. 3. The Capitol's telephones were jammed after Obama urged the public to contact their representatives in his Monday night address.

Conservative bloggers and groups like the Club for Growth, which funds primary campaigns against Republicans it deems too squishy in their conservatism, denounced Boehner's bill as too weak. The U.S. Chamber of Commerce, closer to the GOP mainstream, urged support.

While Boehner searched for votes, some Americans seemed to edge closer to the notion that the Aug. 2 deadline might pass without a solution. The stock market fell again, although not dramatically. California planned to borrow about $5 billion from private investors as a hedge against a possible federal government default.

The White House spoke with veterans groups about what might happen to their benefits if a deal isn't reached. Obama has said he can't guarantee that Social Security checks and payments to veterans and the disabled would go out on schedule.

Freshman Rep. Trey Gowdy, R-S.C., bristled at the idea that tea party-influenced newcomers are sheep-like ideologues willing to risk default.

"We're not a bunch of knuckle-dragging, mouth-breathing Neanderthals," Gowdy said. "We're interested in answering what we perceive to be the mandate, which is to stop the spending and change the way Washington handles money."

Gowdy said he was leaning against Boehner's proposal.