President Obama prepared Thursday to bring bipartisan talks over the debt to a close, as Senate leaders worked across party lines to craft an alternative strategy to raise the nation’s $14.3 trillion debt limit and avert a government default.
“It’s decision time,” Obama told congressional leaders after meeting at the White House for a fifth straight day. Obama gave Republicans until early Saturday to tell him whether any of three options for trimming the federal budget would win GOP support.
“We need concrete plans to move this forward,” he said.
A breakthrough in the White House talks looked unlikely, however, leaving the Senate framework as the chief option for raising the debt limit before Aug. 2, when the Treasury will be unable to pay its bills without additional borrowing authority.
That deadline loomed ever larger Thursday, as China, the U.S. government’s largest foreign creditor, called on U.S. policymakers to take action to protect the interests of investors. Federal Reserve Board Chairman Ben S. Bernanke warned that failure to raise the debt ceiling would amount to “a self-inflicted wound” that would cause “a very severe financial shock” to the global economy. And Treasury Secretary Timothy F. Geithner told lawmakers that they are running out of time.
“We’ve looked at all available options, and we have no way to give Congress more time to solve this problem,” Geithner told reporters after meeting behind closed doors with Senate Democrats. “The eyes of the country are on us, and the eyes of the world are on us, and we need to make sure that we stand together and send a definitive signal that we are going to take the steps necessary to avoid default.”
The ticking clock spawned a day of high political theater on Capitol Hill, as lawmakers grew increasingly nervous about the lack of movement in the House. Many conservative Republicans continued to deny claims of impending calamity, and Democrats unleashed an unusually harsh and personal attack against the man they view as the biggest impediment to compromise, House Majority Leader Eric Cantor (R-Va.).
Senate Majority Leader Harry M. Reid (D-Nev.) said Cantor “shouldn’t even be at the table” in the White House talks, where Cantor has eclipsed House Speaker John A. Boehner (R-Ohio) as the voice of the GOP in demanding unprecedented spending cuts while rejecting Democratic calls for fresh tax revenue.
Reid accused Cantor of fueling the “irresponsible voices in the Republican Party” who continue to view default as a legitimate option for restraining the size of government.
“More than anything else, he is holding up an agreement at this point,” Sen. Charles E. Schumer (D-N.Y.), the No. 3 Democratic leader, said of Cantor.
Democrats have been kinder to Boehner, who briefly seemed willing to work with Obama to craft a landmark debt-reduction package. But Boehner abandoned that effort last weekend, when it became clear that he would have to convince the House rank and file to consent to a rewrite of the tax code that would raise upwards of $1 trillion in fresh revenue over the next decade.
Cantor, by contrast, has drawn a hard line against taxes, casting himself as a champion of the tea party-influenced freshmen who gave Republicans control of the House last fall.
Boehner and Cantor went out of their way Thursday to present a unified front. Boehner slung his arm around Cantor’s shoulders during a televised news conference, telling reporters that “we have been in this fight together.”
“Listen, we’re in the foxhole,” Boehner said. “This is not easy. Because what we’re trying to do here is solve a problem that has eluded Washington for decades. I’m glad Eric’s there, and those who have other opinions, they can keep them to themselves.”
Still, clear differences were apparent between the two GOP leaders. While Cantor dismissed the strategy emerging in the Senate as unworkable, Boehner on Thursday opened the door wide to that approach, saying, “I think it’s worth keeping on the table.”
“What may look like something less than optimal today, if we’re unable to get to an agreement, might look pretty good a couple of weeks from now,” Boehner told reporters. When asked whether the strategy could win a 218-vote majority in the House, the speaker said: “I have no idea.”
Details of the Senate approach were sketchy. Reid said he is working with the White House and Minority Leader Mitch McConnell (R-Ky.) on “a number of different alternatives” for pushing a debt-limit increase quickly through the Senate and the more hostile House.
“We’re not there yet . . . So I’m not in a position right now to tell you where we are going to go,” Reid told reporters at the Capitol.
Reid confirmed, however, that discussions are focused on what McConnell has called “Plan B”: an elaborate legal framework to raise the debt limit by $2.5 trillion that would place the entire political burden for the unpopular move on Obama.
Unveiled earlier this week, McConnell’s plan included no mechanism to force the sharp spending cuts that Republicans have demanded in exchange for voting to lift the debt limit. But in a sign of the unusual political times, Democrats said they were reluctant to go along with that proposal and are pressing to add roughly $1.5 trillion in cuts to government agencies to the measure.
Talks were also underway over a plan to appoint 12 lawmakers from both parties to draft a long-term framework to stabilize the national debt. The new debt committee would be given a deadline, and its recommendations would be fast-tracked to a vote in the House and Senate without amendment, similar to the process used to close military bases.
Late Thursday, McConnell told a radio interviewer that the new debt-reduction panel would “probably be part of the bill” and that it would likely be asked to issue its report by the end of the year.
Given the high stakes, Reid and McConnell were moving quietly. Too much information, Reid said, could “kill” the deal. “It’s best to try to move this down the field very slowly and make sure every step of the way is covered,” he said.
Separately, House leaders are pursuing an amendment to the Constitution that would require Congress to balance the budget. With a vote expected next week, House GOP aides said the vote could go a long way toward soothing conservative angst over the debt limit, even if it doesn’t pass. The Senate is scheduled to vote on a similar measure next week.
House GOP leaders, meanwhile, have summoned rank-and-file lawmakers to an unusual Friday morning meeting to discuss the path forward, a few hours before Obama has scheduled a White House news conference.
Before bringing talks to a close Thursday, Obama gave Republicans three options: The far-reaching $4 trillion deal that includes taxes and cuts to entitlement programs; a $2 trillion package that would require each side to give only a little; and a much smaller package that would include no tax increases and no cuts to entitlement programs — and do much less to solve the nation’s financial problems.