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Posted at 11:05 PM ET, 07/24/2011

Senate Democrats prepare $2.7 trillion debt-limit plan


(J. Scott Applewhite - Associated Press)
With the progress of talks on raising the U.S. debt limit in a state of flux, Senate Democrats are preparing to introduce legislation that would avert a national default on Aug. 2 and achieve $2.7 trillion in deficit savings over the next decade without raising taxes.

Senate Majority Leader Harry M. Reid (D-Nev.) said in a statement after a meeting at the White House on Sunday night that the proposed package “meets Republicans’ two major criteria: it will include enough spending cuts to meet or exceed the amount of a debt ceiling raise through the end of 2012, and it will not include revenues.”

He added: “We hope Speaker Boehner will abandon his ‘my way or the highway’ approach, and join us in forging a bipartisan compromise along these lines,” referring to House Speaker John A. Boehner (R-Ohio).

House Republicans did not immediately respond to the proposal. Boehner said earlier Sunday on a conference call with House Republican members that after Friday’s breakdown in negotiations with the White House over a broader deal, he plans to pursue a two-stage plan that would achieve $1 trillion in deficit savings and enact a short-term extension of the country’s $14.3 trillion debt ceiling. Democrats repeated their opposition to the plan Sunday night.

“Tonight, talks broke down over Republicans’ continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support,” Reid said in his statement, arguing that a short-term deal “would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself.”

“Speaker Boehner’s plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the president,” he added.

Details of Reid’s plan were unavailable Sunday evening, and one major question is whether the proposal would include big cuts to entitlement programs long championed by Democrats, such as Social Security and Medicare.

But at first glance, appears that any deal that included trillions in deficit savings and no tax increases would constitute a victory for Republicans, who have argued against Democratic efforts to include fresh revenue as part of a comprehensive deficit-reduction plan.

In a statement late Sunday, House Minority Leader Nancy Pelosi (D-Calif.) applauded Reid’s proposal, which she said is “approach to reduce the deficit that protects Social Security, Medicare and Medicaid beneficiaries.”

She added: “The major features of Senator Reid’s proposal have already been supported by Republicans in the past months. Our efforts to reduce the deficit are not over and we must work in a bipartisan way to address tax simplifications and reform, and ensure that taxpayer dollars are spent wisely.”

On Sunday’s conference call, House Majority Leader Eric Cantor (R-Va.) told members that the way forward is for GOP members to remain united in their call for any increase in the debt limit to be accompanied by equivalent deficit savings without any tax increases, according to a participant in the call.

And although many members of his conference have maintained that a “cut, cap and balance” approach remains the only feasible approach, Boehner on Sunday signaled for the first time that House Republicans may need to make concessions, telling members on the conference call that any agreement will “require some of you to make sacrifices.”

Of course, as the oft-repeated debt-limit refrain from both parties goes, nothing is agreed to until everything is agreed to — and the next turns in the debt-limit debate are likely to come on Monday afternoon, when both parties in the House will hold their respective caucuses.

House Democrats are slated to meet at 5:30 p.m., with leaders expected to hold a 1 p.m. news conference at the Capitol Visitor Center TV studio. The House Republican conference will huddle at 2 p.m. in a basement meeting room of the Capitol.

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By  |  11:05 PM ET, 07/24/2011

 
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