In his televised address, Obama called for a compromise that reduces the deficit through both spending cuts and increased revenue, while raising the debt ceiling in one step into 2013. Speaking minutes afterward, Boehner (R-Ohio) argued for a plan that would extend the debt ceiling initially for about six months and require another vote to lift it further in 2012. Obama has vowed to veto any such short-term extension, which ratings agencies have said might not be sufficient to avert a downgrading of the United States’ AAA credit rating.
Shrugging off Obama’s efforts to appeal directly to the public, Boehner pushed not only for a House vote Wednesday on his two-stage plan, but scheduled a second vote Thursday on an amendment to the Constitution requiring a balanced budget. A balanced-budget amendment is part of a GOP plan that was approved by the House last week but voted down in the Democratic-controlled Senate. Obama had pledged to veto any such plan that reached his desk.
The House GOP leadership team, often described as fractious, showed complete unity behind closed doors and in public Tuesday. House Majority Leader Eric Cantor (R-Va.) told Republicans he was “150 percent” behind Boehner and his plan, according to Republicans who attended Tuesday morning’s closed-door meeting. He told Republicans to “stop grumbling and whining and to come together as conservatives” to support the Boehner proposal.
House Majority Whip Kevin McCarthy (R-Calif.), the party’s vote counter, began his talk by showing a clip from the movie, “The Town”, trying to forge a sense of unity among the independent-minded caucus.
One character asks his friend: “I need your help. I can’t tell you what it is. You can never ask me about it later.”
“Whose car are we gonna take,” the character says.
After showing the clip, Rep. Allen West (R-Fla.), one of the most outspoken critics of leadership among the 87 freshmen, stood up to speak, according to GOP aides.
“I’m ready to drive the car,” West replied, surprising many Republicans by giving his full -throated support for the plan.
However, a leading conservative lawmaker, Rep. Jim Jordan (R-Ohio), said enough Republicans appear to oppose Boehner’s plan that it would not be able to pass the House on GOP support alone.
In a speech in New York before the Council on Foreign Relations, meanwhile, Christine Lagarde, the new managing director of the IMF, urged American officials to demonstrate the kind of “political courage” she said was shown by European leaders last week in a summit that agreed on new financing for Greece and gave greater powers to a regional bailout fund.
“On the debt ceiling, the clock is ticking, and clearly the issue needs to be resolved immediately,” Lagarde said. “Indeed, an adverse fiscal shock in the United States could have serious spillovers on the rest of the world.” She said a default or downgrading of U.S. debt “would be a very, very, very serious event, not just for the United States but for the global economy at large.”
Lagarde also urged caution in adopting large deficit-reduction measures, saying that “the impact is likely to be negative” in the short term. “Our research has found that a 1 percentage point cut in the deficit could lower growth by about one-half percentage point over two years,” she said. “This is why measures that are legislated now — but only reduce deficits in the future, when the recovery is more robust — would be particularly helpful.”
Staff writers Jon Cohen and Felicia Sonmez contributed to this report.