WASHINGTON — With bipartisan debt-limit talks deadlocked, House Republicans and Senate Democrats readied rival emergency fallback plans Sunday in hopes of reassuring world financial markets the U.S. government will avoid an unprecedented financial default.
Republicans said Speaker John Boehner had legislation under consideration to raise the nation’s debt limit by $1 trillion and enact slightly more in federal spending cuts, with the promise of additional progress on both sides of the ledger if Congress can agree.
Across the Capitol, Democratic officials said Majority Leader Harry Reid was at work on legislation to raise the government’s debt limit by $2.4 trillion – enough to assure no recurrence of the current crisis until 2013 – and reduce spending by slightly more. They said that plan envisioned no higher taxes.
The White House was largely consigned to a spectator’s role on a weekend that began with Boehner’s decision to call off talks with President Barack Obama. Asked what the administration’s plan was to avoid default, Treasury Secretary Timothy Geithner said, “Our plan is to get Congress to raise the debt ceiling on time.”
The state of play veered between bipartisanship and brinkmanship on an issue of immense economic consequences.
Without congressional action by Aug. 2, the Treasury will be unable to pay all its bills, risking a default that could have severe consequences for the U.S. economy and the world’s, too.
Despite hours of compromise talks in the Capitol, lawmakers’ aides had so far been unable to agree on a two-step plan that would satisfy Obama’s demand for a large enough increase in the debt limit to tide the Treasury over until after the 2012 elections.
Interviewed on Fox, Boehner said, “I would prefer to have a bipartisan approach to solve this problem. If that is not possible, I and my Republican colleagues in the House are prepared to move on our own.”
He arranged to brief the Republican rank and file on a conference call late in the day.
It was unclear when Reid would disclose details of his own plan.
The officials who described the rival fallback plans spoke on condition of anonymity, citing the sensitivity of the issue.
Boehner’s plan, still under negotiation on Capitol Hill, is intended to get the nation beyond this crisis and snag enough votes from House Republicans who won’t raise the debt limit without spending cuts, too.
Deeper and more complex reductions in the nation’s deficits would be part of the deal, but under later timelines.
White House chief of staff William Daley said Obama was insisting that any package must expand the debt ceiling beyond the next presidential and congressional elections and into 2013 to provide economic certainty. Daley said anything short of that would be a gimmick and prompt the world to say: “These people just can’t get their act together.”
White House and congressional leaders talked past each other on the Sunday TV shows as negotiations unfolded in secrecy.
“There will be a two-stage process. It’s just not physically possible to do all of this in one step,” Boehner said. “I know the president is worried about his next election. But, my God, shouldn’t he be worried about the country?”
Republican leaders called their rank and file back to Washington earlier than expected for the new work week and set a mid-afternoon Monday meeting to go over the debt-limit legislation.
With an eye on the financial markets, Geithner insisted anew the United States would not default.
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