Top Democrats laud GOP debt-ceiling move

Two top Republican leaders clashed Wednesday over a plan that could allow the government to avoid a potentially catastrophic default but would not ensure the deep cuts in federal spending that party members seek.

Senate Minority Leader Mitch McConnell (Ky.), who offered a proposal this week that would allow President Obama to raise the federal debt limit without guaranteed spending cuts, warned that the Republican Party could “destroy” its brand with voters if Congress allows the government to default.

“All of a sudden we have co-ownership of a bad economy. That is very bad positioning going into an election,” McConnell said on “The Laura Ingraham Show,” a conservative radio talk program.

But House Majority Leader Eric Cantor (Va.) rejected McConnell’s plan for resolving the debt stalemate, instead vowing to press ahead with the campaign to roll back government spending.

“Currently, there is not a single debt limit proposal that can pass the House of Representatives,” Cantor said in a statement released just before top lawmakers from both parties resumed afternoon negotiations at the White House.

Those talks ended on an angry note when Obama and Cantor disagreed over the length of the proposed debt-ceiling increase. Cantor had been urging a short-term extension that would require Congress to vote a second time on the unpopular measure before the 2012 election. The president lectured about the need to drop political posturing, saying several times, “Enough is enough,” according to Democratic officials with knowledge of the closed-door meeting.

“The president told me, ‘Eric, don’t call my bluff. You know I’m going to take this to the American people,’ ” Cantor said. “He then walked out.”

But as he left, Obama added: “I’ll see you tomorrow.”

Before the blow-up, Obama offered a detailed package of $1.7 trillion in spending cuts “that he was comfortable with,” one of the Democratic officials said, adding that he would go even higher if Republicans would accept revenue increases.

Senior leaders in both parties, however, have begun to look outside the White House meetings for a solution, showing increasing interest in a Senate strategy that could use McConnell’s proposal to temporarily bypass House Republicans.

Senate Majority Leader Harry M. Reid (D-Nev.) is working with McConnell on this approach. Aides said the two are discussing a strategy that would pair McConnell’s debt-limit proposal with at least $1.5 trillion in spending cuts identified through bipartisan talks that Vice President Biden has led in recent weeks.

The deal also could create a committee of 12 lawmakers who would be assigned with identifying trillions of dollars in additional savings. The panel’s recommendations would be fast-tracked to votes in the House and the Senate and would not be subject to amendment, a process similar to the one Congress uses for closing military bases.

Congressional Democrats welcomed the approach, as did rank-and-file Republican senators. The Obama administration has reacted more cautiously, but views the approach as a last resort.

The White House has said the impasse must be broken by July 22 to leave enough time to approve the legislation that would lift the current $14.3 trillion debt ceiling by the Aug. 2 deadline. According to Cantor, Obama said the group must choose “by Friday which way we’re going.”

Negotiators have struggled for more than two months to reach an agreement on spending cuts and tax increases that can win approval in a divided Congress. Republicans control the House while Democrats have a slim edge in the Senate.

Efforts to forge a compromise also confront a sharply divided Republican Party.

At issue are diverging assessments of the main risks facing the nation. McConnell has concluded that congressional politics make it impossible to reach a deal over taming the federal deficit in time to avoid a debilitating default.

So he is offering the White House an out, but one that requires Obama to take responsibility for the politically unpopular step of raising the debt ceiling. Under the proposal, a new legal structure would allow the president to increase the debt limit by as much as $2.5 trillion in three installments accompanied by congressional votes.

Cantor and his allies among conservative Republican freshmen remain less troubled by the prospect of default than by the amount of federal spending. Many of these House members came to Washington under the banner of reducing the size of government and are reluctant to surrender the leverage that the debt-limit debate gives them.

For more than six months, Cantor has told rank-and-file Republicans that they could force Obama to agree to deep spending cuts and changes in entitlement programs such as Medicare. Cantor, whose profile in negotiations has recently eclipsed that of House Speaker John A. Boehner (R-Ohio), has argued that raising the debt ceiling without significant and guaranteed spending cuts would surrender the party’s momentum coming out of the 2010 midterm elections.

After the White House meeting, Cantor said he no longer objected to McConnell’s suggestion of multiple votes on the debt limit even though the overall proposal remained unacceptable to the House. He added that Democrats have their own internal divisions, in particular over the size of potential spending cuts.

As the Republican argument continued, Reid was urging that the package he is developing with McConnell be shaped to win fast bipartisan approval in the Senate. Obama has neither embraced the idea nor dismissed it. In Wednesday’s meeting, he said his strong preference is not just to raise the debt ceiling but also to take significant steps to restrain borrowing.

Congressional Democrats like the McConnell approach because it could end the stalemate without forcing them to concede dramatic cuts to health-care and retirement programs that they have vowed to protect.

GOP senators are also embracing the idea. Sen. John McCain (Ariz.) issued a statement offering his strong support, calling the proposal “a smart, forward-looking plan to make clear to all Americans that should we get to August 2nd 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.”

Other Republicans, emerging from a lunch meeting on the topic Wednesday, said they want to vote first on a proposal to amend the U.S. Constitution to require Congress to balance the budget, a measure the House and the Senate are expected to take up next week. But if that measure fails in the Senate as expected, several GOP senators said they would support McConnell’s approach.

“It’s an option if nothing else works,” said Sen. Tom Coburn (Okla.), who plans Monday to announce his own plan to save $9 trillion over the next decade. “Politically, it’s smart, even if policy-wise it doesn’t fix the country’s problems.”

On Wednesday, Democrats from both chambers met to discuss the strategy, which is still a work in progress. And although House Republican leaders are balking, some senior GOP lawmakers said it might help the caucus focus on a viable legislative path forward.

“I think it’s worth considering a Senate-first strategy on this,” said House Ways and Means Chairman Dave Camp (Mich.), whose committee is responsible for drafting debt-limit legislation. “It leaves the House with more options.”

Staff writers Zachary A. Goldfarb and Felicia Sonmez contributed to this report.

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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