With investors growing increasingly anxious about whether Washington will make the Aug. 2 deadline for raising the federal debt ceiling, the stock market tumbled Wednesday, sending the Standard & Poor’s 500-stock index down 2 percent, the most in nearly two months.
Republicans claimed that momentum was on their side as Boehner spent Wednesday afternoon huddling with members of the 87-strong class of freshmen that delivered him the gavel after the 2010 midterm elections. But aides and lawmakers suggested the decisive votes could belong to about two dozen veterans with no strong allegiance to their leadership. Some estimates showed nearly 20 Republicans declaring their intent to oppose the bill.
Republicans received a dose of good news when congressional budget analysts credited Boehner’s legislation with $917 billion in spending cuts. Boehner’s team had revised the bill Tuesday night after the Congressional Budget Office estimated that
the initial draft represented $850 billion in reductions, far less than he had advertised.
Across the Capitol, Reid continued to oppose Boehner’s two-step approach to lifting the debt ceiling, which would entail expanding the government’s borrowing authority for a few months and then holding another vote early next year on a further increase.
“It’ll be altered,” Reid told reporters, “if it gets over here.”
Reid’s own deficit-reduction plan, which calls for raising the debt ceiling enough to cover federal obligations into 2013, faced challenges of its own from the GOP, which objects to the accounting in the bill.
The next move depends on the House vote scheduled for Thursday.
If the Boehner legislation survives that white-knuckle roll call, it will move across to the Senate, where Reid is expected to amend it. He held late-afternoon discussions with Senate Minority Leader Mitch McConnell (R-Ky.) in their continuing effort to craft a compromise that could clear the Senate by the end of the weekend.
Under this scenario, the amended bill would go back to the House for another vote early next week. But Senate Republicans could balk at any changes in the Boehner bill, forcing President Obama and Senate allies to choose between the legislation or the prospect of default.
If Boehner’s bill fails in the Thursday vote, Democrats say, Reid’s current proposal would ultimately prevail, perhaps with some revisions designed to win bipartisan support.
“All eyes are on the House,” said Sen. Rob Portman (R-Ohio), a friend of Boehner’s and a former White House budget director who has been involved in the talks.
House Republicans meet
Wednesday began with a rowdy 9 a.m. meeting of the House Republican Conference, where Boehner and his leadership team reached a boiling point with the conservative wing of the caucus. At one point, according to several people in the basement room of the Capitol, Boehner told Republicans to “get your ass in line” because the other options were so distasteful, winning a standing ovation.
Most encouraging for Boehner was that the self-proclaimed “Young Guns” — his deputies who are frequently portrayed as up-and-comers angling to succeed him — rallied together behind a strategy they all supported. The Republican leadership sees the legislation as an all-in investment for the whole group, not just Boehner.
After Boehner addressed the group, House Majority Leader Eric Cantor (R-Va.), who had negotiated many of the bill’s spending cuts in previous talks with the White House, spoke in favor of the legislation.
He was followed by House Budget Committee
Chairman Paul Ryan (R-Wis.) and House Majority Whip Kevin McCarthy (R-Calif.).
Cantor told members that he was “tired of seeing Republicans on TV taking shots at Republicans” and told colleagues that “we all need to rally together. We all agree that the president doesn’t have the right policies for the country,” according to the aide.
With Democrats unlikely to back Boehner’s bill, at least until Republicans provide the majority themselves, the speaker can afford to lose only about two dozen of his party members.
About 30 members spoke up at the gathering. Six said they had been leaning against the Boehner plan but were behind it, according the aide, who was not authorized to speak publicly about internal conference meetings.
Two members voiced opposition to the plan.
Afterward, some lawmakers who had been on the fence expressed their support.
“I’ve given this careful consideration, and I’ve decided this is what’s best for our country,” said freshman Rep. Scott Rigell (R-Va.). “I respect the process the leadership went through.”
Other important signs of support came from Rep. Mike Pence (R-Ind.), who considered running president on a pure conservative plank, and Rep. Darrell Issa (R-Calif.).
Several Republicans also lashed out at the leaders of the Republican Study Committee, an organization of conservative lawmakers. The group’s staff had urged outside conservative organizations to target certain Republican members and pressure them to vote against the bill.
Some conservatives were upset that the measure would not cut $1.2 trillion over 10 years, as first promised, even after the rewrite of the initial draft.
With that draft producing only $850 billion in savings, House Republicans cut even more deeply from government agency budgets, increasing the savings to $915 billion over the next decade, according to the CBO.
The revised measure meets Boehner’s demand that spending reductions exceed the size of the proposed $900 billion debt-limit increase.
Reid plan’s savings
Earlier Wednesday, the CBO also reported that Reid’s bill included a smaller cut in the federal deficit than Democrats had advertised. The nonpartisan budget analysts said the Senate proposal to lift the legal limit on the national debt would slice $2.2 trillion from the federal deficit over the next decade, short of its $2.7 trillion target but far more than the cuts in Boehner’s plan.
That analysis found that the Reid measure would cut about $840 billion from agency budgets through 2021, about the same as Boehner’s proposal.
But Reid also claims significant savings from winding down the wars in Iraq and Afghanistan.
The CBO found that those savings account for more than $1.1 trillion, making up about half of Reid’s debt-reduction package.
Republicans have dismissed the inclusion of war savings as a budget gimmick, arguing that the nation has no intention of spending that money.
As the clock ticked toward Aug. 2, the Treasury Department was planning to release details of how the “the government would operate without new borrowing authority if the debt limit is not increased,” said an administration official.
The department would begin to specify which bills it would pay if the government does not have enough money to pay them all.
Meanwhile, House Democrats urged Obama to simply declare the debt limit unconstitutional and go about the business of borrowing more money and paying the nation’s bills. But White House press secretary Jay Carney threw cold water on such ideas.
“There are no off-ramps. There’s no escape,” he told reporters, adding, “The president does not have the authority to raise the debt ceiling.”
With the rival Republican and Democratic bills probably headed to a stalemate, many lawmakers were waiting for new ideas to emerge at the last minute.
“At the end of the day, I think we all understand this is going to have to be an agreement between Senator Reid and Speaker Boehner, primarily,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.).
Seasoned veterans expressed hope that a compromise could be reached by Tuesday. But their optimism was based on old congressional truisms that the August recess would ultimately force a peace treaty.
“The world still is run by deadlines, debt limits and recesses,” said Sen. Max Baucus (D-Mont.), the Finance Committee chairman first elected in 1978. “The two together are going to help us put this together. Those old jet fumes are going to help us.”