Hope for debt deal, despite disputes, veto threat

DAVID ESPO

AP Spe­cial Correspondent

WASHINGTON — Cri­sis con­cerns ris­ing, House Repub­li­can lead­ers shrugged off a White House veto threat and an out­break of ten­sions within their own party Wednes­day as they built sup­port for leg­is­la­tion to stave off the gov­ern­ment default threat­ened for next week. Wor­ried Wall Street sent stocks plung­ing on fears that polit­i­cal grid­lock would prevail.

“I can’t do this job unless you’re behind me,” House Speaker John Boehner bluntly told his frac­tious rank and file as he pleaded for the votes to pass the bill, which was hastily rewrit­ten to show deeper spend­ing cuts than 24 hours earlier.

The While House dis­par­aged the mea­sure Repub­li­cans were work­ing so hard to pass. Sen. Harry Reid of Nevada called it “a big wet kiss for the right wing,” and all 51 Sen­ate Democ­rats and two inde­pen­dents pledged to scut­tle it if it cleared the House.

The White House has threat­ened a veto, say­ing the bill does not meet Pres­i­dent Barack Obama’s demand for an increase in the debt limit large enough to pre­vent a rerun of the cur­rent cri­sis next year, in the heat of the 2012 elec­tion campaign.

Instead, Obama sup­ports an alter­na­tive drafted by Reid that also cuts spend­ing, yet pro­vides enough addi­tional bor­row­ing author­ity to tide the gov­ern­ment over through next year.

For all the blus­ter, there were hints that a com­pro­mise might be near.

“Magic things can hap­pen here in Con­gress in a very short period of time under the right cir­cum­stances,” said Reid, the Sen­ate major­ity leader.

With­out leg­is­la­tion in place by Aug. 2, admin­is­tra­tion offi­cials say the Trea­sury will not be able to pay all the nation’s bills, pos­si­bly trig­ger­ing a default that could prove cat­a­strophic for an econ­omy still recov­er­ing from the worst reces­sion in decades.

Two days after Obama and Boehner made unprece­dented back-to-back speeches on national tele­vi­sion, there was evi­dence that the debt cri­sis was becom­ing a national cause of concern.

Shawn Bon­ner of Boerne, Texas, said, “I don’t think the peo­ple who are mak­ing the deci­sions live in the same envi­ron­ment we do.” She said of the two sides: “They’ve both dug in their heels for polit­i­cal state­ments, and we need them to make deci­sions to help the coun­try.” She was in Ten­nessee, tour­ing the State Capitol.

The U.S. finan­cial mar­kets posted big losses for the day as polit­i­cal lead­ers maneu­vered. The Dow Jones indus­trial aver­age fell nearly 200 points and appeared headed for its worst week in nearly a year.

“Con­fi­dence in our polit­i­cal sys­tem is begin­ning to fade.” said Chan­ning Smith, man­ag­ing direc­tor of Cap­i­tal Advi­sors Inc. “As hours pass and the uncer­tainty builds, I think the mar­ket is start­ing to price in the poten­tial that we might not have a solu­tion by Aug. 2.”

In Wash­ing­ton, across from the Capi­tol, a few dozen tea party activists ral­lied — and appeared as divided as the con­ser­v­a­tives in the House. Some issued an online call for Boehner to resign as speaker, while oth­ers said he deserved time to try and strike the best deal possible.

The Repub­li­can leg­is­la­tion under­went revi­sions to increase its prospects of passage.

That meant changes that brought pro­jected sav­ings for 2012 to $22 bil­lion, part of a 10-year cut of $917 bil­lion in all that would trig­ger a $900 bil­lion increase in the debt limit. The bill also would estab­lish a spe­cial com­mit­tee of law­mak­ers to rec­om­mend addi­tional cuts that would trig­ger addi­tional bor­row­ing author­ity if approved.

While the two par­ties’ bills dif­fered in key details, they also shared sim­i­lar­i­ties that under­scored the con­ces­sions made by both sides in recent days. Reid’s bill does not envi­sion a tax increase to reduce deficits, a bow to Repub­li­cans. But nei­ther does the House mea­sure require both houses to approve a con­sti­tu­tional bal­anced bud­get amend­ment for state rat­i­fi­ca­tion, a step in the direc­tion of Obama and the Democrats.

For Boehner, Wednesday’s House vote shaped up as a crit­i­cal test of his abil­ity to lead a frac­tious major­ity that includes 87 first-term law­mak­ers, many of them elected with tea party sup­port. Pas­sage was also imper­a­tive to max­i­mize the leadership’s lever­age with Obama and Reid in a fast-approaching endgame.

The speaker was direct in the meet­ing with rank-and-file GOP law­mak­ers on Wednes­day. “Get your ass in line,” he told them. “I can’t do this job unless you’re behind me.”

If House con­ser­v­a­tives tor­pedo the bill, any follow-up would prob­a­bly require Demo­c­ra­tic votes to pass. That, in turn, would mean smaller spend­ing cuts than Repub­li­cans are seek­ing in exchange for rais­ing the nation’s $14.3 tril­lion debt limit.

As Wednesday’s vote approached, some Repub­li­cans seemed to be swing­ing behind the leg­is­la­tion, how­ever reluctantly.

“Rep. Bill Huizenga, a first-term law­maker from Michi­gan, said he was unde­cided how to vote, but he added, “This is about as good as it’s going to get. That’s a pretty strong argument.”

“Nancy Pelosi, Harry Reid and Pres­i­dent Obama are going to be sur­prised tomor­row night,” said Rep. Allen West, a Florida first-term Repub­li­can. “I’ll bet my retire­ment check on it. I’m a con­ser­v­a­tive. I’m going to sup­port this.”

There was strong oppo­si­tion from some law­mak­ers, though.

“I don’t know where the votes are today,” said Rep. Jim Jor­dan, R-Ohio, a leader of the Repub­li­can Study Com­mit­tee, an orga­ni­za­tion of con­ser­v­a­tive Repub­li­can law­mak­ers who often have dis­agreed with the lead­er­ship. “I just know that I am against the bill.”

But Jor­dan felt obliged to open a closed-door meet­ing of the GOP rank and file dur­ing the day by apol­o­giz­ing for the actions of two aides. Offi­cials said one sent an email to out­side orga­ni­za­tions sug­gest­ing they lobby some RSC mem­bers who were waver­ing on the debt limit bill. A sec­ond aide recounted details of an ear­lier GOP closed-door meet­ing in an email he had sent.

As Rep. Greg Walden, R-Ore., read one of the emails aloud, there were scat­tered calls to “fire him,” refer­ring to the aide respon­si­ble. The offi­cials who described the events did so on con­di­tion of anonymity, say­ing they were not autho­rized to dis­close details from a closed-door meeting.

Across the Capi­tol, Reid played a wait­ing game, sched­ul­ing no votes until Boehner could show he could pre­vail in the House.

The White House rejected one pro­posed way out of the crisis.

Demo­c­ra­tic Rep. Jim Clyburn sug­gested the pres­i­dent uni­lat­er­ally raise the debt limit, cit­ing a clause in the 14th Amend­ment to the Con­sti­tu­tion that says the valid­ity of the nation’s pub­lic debt “shall not be questioned.”

Obama said sev­eral days ago he had con­sulted with White House lawyers on that point and they were unen­thu­si­as­tic about the idea.

At the White House, Car­ney was dis­mis­sive of the sug­ges­tion. “There are no off-ramps. There is no way around this. There is no escape,” he said.”

Pend­ing revi­sions, the Con­gres­sional Bud­get Office said the House leg­is­la­tion would cut deficits by about $850 bil­lion over 10 years, short of a promised $1.2 tril­lion, while allow­ing a $900 bil­lion increase in bor­row­ing authority.

Equally trou­ble­some among the rank and file, it would gen­er­ate just a $1 bil­lion deficit cut in the first year after it was implemented.

A sec­ond, $1.6 tril­lion increase in bor­row­ing author­ity would depend on Con­gress’ abil­ity to make addi­tional cuts of at least $1.8 tril­lion later this year or in 2012.

Reid coun­tered with a mea­sure that bud­get ana­lysts said would cut a lit­tle more than $2 tril­lion, a half-trillion less than promised, while rais­ing the debt limit by $2.7 trillion.

To the irri­ta­tion of Repub­li­cans, about $1 tril­lion of his sav­ings would come from assump­tions that the wars in Iraq and Afghanistan would soon wind down, result­ing in smaller-than-expected Pen­ta­gon bud­get needs.

Posted by AP News on Jul 27 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.