Over the weekend, congressional negotiators focused their attention on Boehner’s proposal to raise the debt limit in two stages. Their goal was to make it more palatable to Democrats — particularly President Obama. On Sunday afternoon, they thought they were close.
But after a 6 p.m. powwow at the White House, Obama, Senate Majority Leader Harry M. Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) rejected the emerging compromise, saying it would leave the door open to another wrenching debt-limit battle in just a few months.
“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 a written statement. “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.”
Reid said he would turn instead to an entirely new approach “that meets Republicans’ two major criteria,” which are spending cuts designed to meet or exceed the amount of the debt-limit increase and no new taxes. Under Boehner’s rules, Reid said, the $2.7 trillion debt-reduction package he plans to unveil Monday should buy the Treasury sufficient borrowing authority to pay the nation’s bills through the end of next year.
“We hope Speaker Boehner will abandon his ‘my way or the highway’ approach, and join us in forging a bipartisan compromise along these lines,” Reid said.
Reid offered no further details about the plan. A Senate Democratic leadership aide, speaking on the condition of anonymity because the plan has not been publicly released, said the package would include cuts of up to $1.2 trillion over the next decade to government agencies, including the Pentagon. Democrats had previously offered to accept those savings, as well as about $200 billion in cuts to non-health direct-payment programs, such as farm subsidies.
The aide declined to say what else the package might contain. But people familiar with the months-long search for a debt-reduction compromise said that hitting such a large target without raising taxes or cutting entitlement programs would probably require Reid to rely heavily on savings from ending the wars in Iraq and Afghanistan — a figure budget analysts said could easily amount to more than $1 trillion over the next decade.
Counting money not spent on wars that the nation is already planning to end is widely viewed as a budget gimmick, and House GOP leaders have been reluctant to include it as savings. But it has a political advantage because it was included in the budget blueprint House Republicans adopted this spring. And Democratic sources said the option may look more attractive as the clock ticks down to Aug. 2, when Treasury officials say they will run out of money to pay all of the government’s bills.