The proposal would transform the political dynamics of the debate, placing the entire burden for raising the $14.3 trillion debt limit on Obama. Republican lawmakers would be spared from voting to raise the limit and could shift their campaign for unprecedented spending cuts to the congressional appropriations process, where the risk of stalemate is shutting down the government instead of capsizing the U.S. economy. However, they would lose the approaching deadline as leverage to pursue their cost-cutting agenda.
The proposal is “not my first choice,” McConnell told reporters. But with a bipartisan agreement looking increasingly doubtful, he said, “we’re certainly not going to send a signal to the markets and to the American people that default is an option.”
McConnell’s proposal came as Obama warned that Social Security and disability checks could be delayed next month if the two sides fail to reach an agreement, piling fresh hardship on millions of families and putting new pressure on the sputtering recovery.
“I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it,” Obama said in an interview with CBS News.
The White House reacted cautiously to the McConnell plan. Press secretary Jay Carney said in a statement that Obama is still committed to “seizing this unique opportunity to come to agreement on significant, balanced deficit reduction.”
Publicly, Senate Majority Leader Harry M. Reid (D-Nev.) left the door open to the idea. “I’m willing to look at this,” he told reporters. Privately, Reid has consulted with McConnell about making the proposal more palatable to reluctant Republicans by creating a joint committee to draft an enforceable debt-reduction plan, according to senior sources in both parties. Details are still being worked out, but the new committee would be stocked with Democratic and Republican lawmakers, and their budget-cutting plan could be fast-tracked to a vote in each chamber.
House Minority Leader Nancy Pelosi (D-Calif.) thanked McConnell for offering the plan as the leaders met at the White House on Tuesday afternoon for a third straight day of negotiations, according to a GOP source briefed on the meeting.
House Republicans were more openly skeptical. Aides said it would be extremely difficult to sell the plan to the rank and file, many of whom believe they were sent to Washington to radically reduce the size of government and have vowed for months to use the debt-limit debate to do it.