THE SENATE Democratic majority leader Harry Reid and Republican Speaker of the House of Representatives John Boehner campaigned yesterday for their rival plans to solve the US debt crisis before next Tuesday’s deadline, after the Congressional Budget Office concluded that neither plan would achieve the amount of cuts it vaunted.
Mr Boehner postponed a vote on his Bill until today, to give himself time to find further savings after the budget office announced on Tuesday night that his plan would achieve only $850 billion in cuts rather than more than $1 trillion he had claimed.
The amount and duration of the rise in the debt ceiling – the legal federal borrowing limit – is proving to be a sticking point. Mr Reid’s plan would fund the US government through the 2012 presidential election – a measure that Mr Boehner decries as giving President Barack Obama “a blank cheque”.
Mr Boehner’s plan would fund the government only until early next year, forcing the country to endure yet another excruciating debt crisis within six months. The Obama administration argues that these repeated disputes sap confidence in the US economy.
In a speech on the Senate floor yesterday, Mitch McConnell hardened the Republican line, accusing Mr Obama of threatening to veto the Boehner plan – in the unlikely event it passes in Congress – for his own political gain.
“What about this legislation is so offensive that you’d rather see the nation default on its obligations than have the president sign it into law?” Mr McConnell said. “Do they really intend to suggest that he veto the nation into default for political reasons?. . . What he wants more than anything else is more room under the debt ceiling to get him through the election. He’s said that’s his bottom line.”
The Republican and Democrat plans have many similarities, which would make it relatively easy to merge them if the two sides could reach a compromise on one point: the size of the debt ceiling increase.
The budget office said Mr Reid’s plan would cut the deficit by $2.2 trillion, $500 billion short of the $2.7 trillion he claimed, and $200 billion short of the $2.4 trillion debt ceiling increase that Mr Reid proposes.
At Republican insistence, any plan to raise the debt ceiling must include more cuts than increases.
Mr Reid said the only “true compromise” was the Democrats’ plan. “We’re running out of time,” he said yesterday. Mr Boehner described his Bill as “the best opportunity we have to hold the president’s feet to the fire”.
The White House believes that neither of the rival plans can clear Congress before next Tuesday's deadline, and is "working on plan B" to avoid a default, Mr Obama's press secretary Jay Carney told the Wall Street Journalyesterday.
The White House alternative plan could be finalised over the weekend and put to a vote on Monday or Tuesday. It would combine elements of the Reid and Boehner plans with an earlier proposal by the Republican senator Mitch McConnell, the newspaper reported.
The White House plan could include caps on appropriations, a congressional commission to propose further cuts in spending and a "disapproval mechanism" like the one Mr McConnell proposed, so that Republicans could express discontent while allowing Mr Obama to raise the debt ceiling. – Additional reporting: Copyright The Financial Times Limited, 2011; Bloomberg