Lawmakers Craft Alternate Debt Plans

The debt ceiling clock is ticking, and Democrats and Republicans are still struggling to come up with a solution in Washington, D.C. If no deal is struck, the creditworthiness of the United States could be at stake. NPR's Scott Horsely talks with host Guy Raz from the White House.

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GUY RAZ, host: Let's turn now to the White House, where NPR's Scott Horsley is located. Scott, what is the White House saying about all this at the moment?

SCOTT HORSLEY: Well, the White House is not going to like the plan being floated by Speaker Boehner because that plan would require a second vote to raise the debt ceiling early next year. President Obama has said all along that he wants enough headroom on the government's credit card to carry the country into early 2013. He repeated that last Friday after the Boehner blowup and said that is his one bottom line. The GOP is obviously trying to push that line, make it appear that the president is the one who cannot say yes.

They argue that the president's timing is because he's worried about his own re-election bid. What the administration says, no, this is about uncertainty over the debt ceiling and what it's doing to the economy, which is poisoning the economy and slowing economic growth. They say it's been hard enough to raise the debt ceiling this year in this climate. They don't want to go through this all over again six or eight months from now when the looming presidential election has ratcheted up the partisanship even higher.

RAZ: Scott, we're down to the wire. The markets - the financial markets so far had been very forgiving. Is that likely to change this week?

HORSLEY: Well, you're right, Guy. You know, up until now, the markets have pretty much yawned at this whole drama because the - Wall Street is essentially assuming that despite all the political bickering, sooner or later, Congress will raise the debt ceiling in time to avert a government default.

Now, there is some concern that after the fireworks on Friday, when the big talks between the president and Speaker Boehner abruptly ended, that that might weaken Wall Street's confidence. But as he made the round of the Sunday talk shows this morning, the Treasury secretary, Timothy Geithner, was trying to provide reassurance, saying one way or another, Congress will raise the debt ceiling. The full faith and credit of the government will be preserved.

The bigger question, though, is whether Congress just does that, whether they just deal with this urgent but manufactured crisis around the debt ceiling, or do they tackle the bigger picture, the longer-term deficits. If they don't come up with a credible plan to really tackle those long-term deficits, just raising the debt ceiling might not be enough. We could still wind up seeing the U.S. government's credit rating downgraded.

And the administration has been warning with some good reason that that would be the effect - in effect, that would be a tax on all Americans because interest rates would go up, mortgages would cost more, credit cards would cost more, that sort of thing.

RAZ: Scott, what about the politics of this? How is it playing politically for the president?

HORSLEY: Well, polls suggest so far, President Obama is faring better than Congress, which isn't saying very much. Most Americans do support the kind of balanced approach to deficit reduction that he's been pushing, with some increase in tax revenues along with cuts in government spending. He's also tried to position himself as he's the one who's willing to compromise. Again, that's why the Boehner plan is trying to sort of switch that around and make it look as if the president is the one who's saying no to an opportunity to extend the debt ceiling on a short-term basis.

And, look, if the White House and Congress doesn't fix this debt ceiling somehow, Americans are going to be justifiably disgusted with everyone here in Washington.

RAZ: That's NPR's Scott Horsley at the White House. Scott, thanks.

HORSLEY: My pleasure, Guy.

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