CQ TODAY ONLINE NEWS
July 13, 2011 – 11:13 p.m.
Tension Escalates at Debt Talks
By Joseph J. Schatz, CQ Staff
Deficit-reduction talks neared collapse Wednesday after President Obama took a hard line with House GOP leaders, refusing to entertain a short-term debt limit increase and Republican demands for correspondingly large spending cuts.
The latest dustup came as senior Senate Republicans, sensing political peril in any debt limit standoff, continued their effort to engineer a smooth end to the months-long debt debate.
Despite Senate GOP wariness, rank-and-file House Republicans are still agitating for a knock-down fight with the president, as an Aug. 2 deadline for raising the $14.3 trillion deadline approaches.
But as Obama seeks the political middle ground, it remains unclear exactly what the House GOP caucus will accept.
Some conservatives have said they would vote against a debt increase no matter what the final package includes. And the two sides have been increasingly at odds over the GOP demand that any increase in the debt ceiling be accompanied by equal cuts in spending, particularly as Democrats push for smaller rollbacks.
That is making a final deal elusive for House Speaker
A Wednesday evening negotiating session ended abruptly after Cantor and Obama sparred over a short-term debt increase. The skirmish seemed to underscore House Republicans’ rising frustration with their inability to force the president to agree to major spending cuts without revenue increases.
It also appears to bolster Senate Minority Leader
Until July 12, House Republicans had dismissed talk of any short-term increase in the debt limit, fearing they would not be able to round up Republican support in the House for multiple debt limit increases; Obama had ruled out short-term moves of less then six months as well.
But after the Wednesday meeting between Obama and congressional leaders, Cantor said that he repeatedly had asked Obama whether he would support raising the debt limit by $2.4 trillion in two steps, with the first package including spending cuts now agreed to, and the second measure containing further spending cuts at a later date.
“He said to me, ‘You’ve got to compromise on your dollar-for-dollar insistence, or you compromise on the big deal,’ ” Cantor said.
According to Cantor, Obama dismissed the call for a short-term increase.
Tension Escalates at Debt Talks
“He said to me, ‘Eric, don’t call my bluff. I’m going to the American people with this.’ I was somewhat taken aback,” Cantor said. “He shoved back and said, ‘I’ll see you tomorrow.’ And walked out.”
Cantor also said that while Obama has agreed to $1.7 trillion in spending cuts, House and Senate Democratic leaders have pushed what they are willing to cut down to $1.4 trillion.
Democratic aides disputed Cantor’s characterization of the meeting and said it was productive until the very end. “The president shot him down, loudly and clearly for doing what he’s done from the start — not showing the slightest interest in being productive,” an aide said.
Faced with the ongoing stalemate, McConnell released a backup plan July 12 that effectively would allow Obama to raise the debt limit in three steps over the next year and a half, as long as he proposed accompanying spending cuts. Instead of guaranteeing deficit reduction, it would force Democrats into a series of politically difficult debt limit votes leading up to the 2012 election.
McConnell’s plan has made it increasingly likely that the ultimate debt limit deal will move first through the Senate, not the House. And it seems likely that if House Republicans consider any Senate compromise, they may try to add spending cuts to it.
The House, however, is likely to act first on a more stringent fiscal austerity plan that is being promoted by tea party groups but stands little chance of passage in either chamber.
Senate leadership aides on both side of the aisle were considering possible changes to the McConnell plan that might draw more support. Yet even as the plan drew criticism from various deficit hawks and conservatives, it drew increasing praise from Majority Leader
McCain, the party’s 2008 presidential nominee, said on Wednesday he hoped the plan would motivate both sides to “seriously negotiate an agreement.”
McCain called it “a smart, forward-looking plan to make clear to all Americans that should we get to Aug. 2 without an agreement, it is President Obama alone — and not Republicans in Congress — who decides whether to raise the debt limit, and owns the economic consequences of any default.”
But the primary criticism of the plan is that it is a political solution — not a substantive one — and that it essentially forfeits months of GOP efforts to leverage the debt ceiling vote into an effort to shrink the federal budget. “It offers Reid and Obama everything they want — a $2.4 trillion increase in the debt limit with no spending cuts or reforms,” said Sen.
Rank-and-file House Republicans insisted that GOP leaders keep up the fight, and pushed back against the McConnell plan.
Tension Escalates at Debt Talks
“When I first heard about it yesterday, I thought it was a joke,” said
One House GOP aide argued that most House Republicans think Obama will end up going along with Republican demands. Conservatives object to the McConnell plan because it allows the president to get his debt limit increase without any spending cuts.
Advocates of a grand deficit reduction deal, like Senate Budget Chairman
“I don’t see how you pass anything through the House that doesn’t substantially change the reason we’re in debt,” he said. “The people who got elected in 2010 are going to go down fighting.”
No Quick Fix
Cantor declared Wednesday that “right now,” none of the existing deficit reduction proposals would garner 218 votes in the House.
Without specifically mentioning McConnell’s contingency plan, Cantor said that “currently, there is not a single debt limit proposal that can pass the House of Representatives.”
Boehner, R-Ohio, has been careful not to dismiss the McConnell plan, which could provide a last-minute exit strategy as Aug. 2 — the date after the which the government will start defaulting, according to the Treasury Department — draws near.
“There would be a lot of convincing that would have to be done to go that route,” said Rep.
Paul M. Krawzak contributed to this story.