NPR logo No Progress As U.S. Debt Default Looms


No Progress As U.S. Debt Default Looms

House Speaker John Boehner (R-OH), surrounded by plainclothes police officers, arrived at the Capitol for a House GOP caucus meeting Wednesday. Chip Somodevilla/Getty Images hide caption

toggle caption Chip Somodevilla/Getty Images

House Speaker John Boehner (R-OH), surrounded by plainclothes police officers, arrived at the Capitol for a House GOP caucus meeting Wednesday.

Chip Somodevilla/Getty Images

Congress appeared no closer to a debt-ceiling deal Wednesday as Republicans overhauled House Speaker John Boehner's spending plan to include more cuts, and Democrats said the plan would be dead on arrival in the Senate.

Boehner (R-OH) said in a statement that the new numbers from the Congressional Budget Office released Wednesday indicate the bill cuts and caps spending by $917 billion over 10 years. That's more than the $900 billion increase in the nation's borrowing authority in the legislation. The bill was revised after the nonpartisan CBO said Tuesday the measure would reduce spending less than advertised.

Boehner is pushing for a vote on the bill on Thursday as rank-and-file conservatives have slowly coalesced behind the legislation.

Senate Majority Leader Harry Reid (D-NV) called Boehner's plan "a big wet kiss for the right wing." Reid scheduled no votes on his plan until Boehner could show he could prevail in the House.

The Boehner plan's prospects in the Senate are bleak. Every Senate Democrat and two independents who usually vote with them signed a letter to Boehner promising to oppose the plan.

In other developments Wednesday:

— CBO analysts said Reid's plan also fell short of its goal, but that it would reduce deficits by twice as much as Boehner's plan.

— House Republicans appeared to coalesce around Boehner's plan, though some in the Tea Party were opposing it.

— The head of a top credit rating agency said some of the steps being considered by Congress could lower the U.S. debt burden that would allow the U.S. to retain its triple-A credit rating.

— House Democrats called on President Obama to invoke the 14th Amendment to prevent the nation from going into default.

Senate Majority Leader Harry Reid of Nev., accompanied by fellow Democrat Sen. Charles Schumer of New York, said at a news conference Wednesday that he'd wait to see what the House does before bringing his own proposal up for a vote. J. Scott Applewhite/AP hide caption

toggle caption J. Scott Applewhite/AP

Senate Majority Leader Harry Reid of Nev., accompanied by fellow Democrat Sen. Charles Schumer of New York, said at a news conference Wednesday that he'd wait to see what the House does before bringing his own proposal up for a vote.

J. Scott Applewhite/AP

Reid's Plan

In a letter to Reid, the CBO said the Senate plan would reduce budget deficits by about $2.2 trillion over a decade.The plan fell short of expectations: Democrats said they could reduce deficits by $2.7 trillion.

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.

The Democrats' measure would cap discretionary spending, put separate limits on war funding and "enhance compliance with tax laws," which some Republicans have branded a tax increase. Their plan also would raise the national debt limit by $2.7 trillion.

GOP Support For Boehner Plan

Boehner has been struggling to assuage Tea Party-backed conservatives who have threatened to oppose any plan that raises taxes or doesn't cut spending deeply enough. Democrats have insisted that raising revenues is a key part of any proposal to lower the deficit.

"We need more drastic cuts," said Tea Party-backed Rep. Jason Chaffetz (R-UT). "I can't support it in its current form."

Rep. Tim Huelskamp (R-KS) told All Things Considered's Robert Siegel he is a "certain no" on the Boehner plan.

House Deputy Whip Tom Cole (R-OK), speaking to NPR on Wednesday, acknowledged that getting a plan passed would be challenging, but that "the great majority of the [Republican] conference is actually behind what the Speaker proposes."

"The big difference between the Reid plan and the Boehner plan is ... look, the Reid plan is based on a trillion dollars' worth of savings because the Iraq and Afghan war, presumably, will end," Cole said. "That's true enough, but those aren't real savings. That's money nobody was ever planning to spend in the first place."

It's not clear that either plan — Boehner's or Reid's — could make it through both chambers of Congress or, in the case of the GOP measure, avoid a threatened presidential veto.

House Democratic Whip Rep. Steny Hoyer (D-MD) said it's unlikely Boehner's plan will get any votes.

"What Boehner is offering is a short-term, interim solution, which will continue to keep us in this position," he said in an interview with All Things Considered.

14th Amendment

Rep. James Clyburn of South Carolina, a member of the Democratic leadership, said he told fellow Democrats that Obama should both veto any House GOP plan for a short-term extension of the debt ceiling and invoke the 14th amendment, which says that the validity of the nation's public debt "shall not be questioned."

White House spokesman Jay Carney, asked about Clyburn's proposal, said only Congress has the authority to extend the government's borrowing authority.

"The president does not have authority to raise the debt ceiling. It's not a plausible way to address this problem, and we do not think it is an option," he said.

Obama's chief of staff, Bill Daley, told NPR on Wednesday that Boehner faces political realities in his party that "he's got to deal with, as does the president."

Daley said Obama, like Boehner, has gotten "enormous blowback" from his supporters in agreeing to some painful cuts. But he said the president "was willing to take that criticism because he believed that a deal that strengthened Medicare, strengthened Medicaid and was balanced."

Reid held off forcing a vote on his competing measure, which was unveiled Monday to poor reviews from Republicans such as Senate Minority Leader Mitch McConnell of Kentucky.

"We believe the Reid proposal is not a serious effort to address deficit and debt, and should be defeated," McConnell said early Tuesday. Later, he said he would be "prepared to accept something less than perfect, because perfect is not achievable."

U.S. Credit Rating

If Congress can't get a deal done, lawmakers could opt to raise the debt ceiling by $1 trillion to keep the government fully functioning past Tuesday's deadline to continue the government's borrowing powers and avert possible defaults on U.S. loans and obligations — such as $23 billion worth of Social Security payments due the next day.

The Capitol's phone lines and websites were jammed after Obama urged the public to contact their representatives in his Monday night address.

Even if Congress manages to cobble together something that defers default for several months, the credit rating agencies might still decide that isn't enough. Without a longer-term plan to reduce the underlying deficit, those private agencies could choose to downgrade U.S. debt. Moody's, Standard & Poor's and Fitch Ratings have all issued warnings that they may downgrade the U.S. government's current triple-A credit rating.

"If you have a second-rate credit rating, it means in the eyes of the world you're a second-rate country," said Jim Kessler, vice president for policy at Third Way, a progressive advocacy group.

But the president of Standard & Poor's told a congressional panel Wednesday that previous reports that $4 trillion in deficit cuts would be needed over a decade for the U.S. to retain a top bond rating were inaccurate.

Deven Sharma, however, refused to give a specific figure that would prevent a downgrade.

Kessler said Republicans are "very reluctant to do something big here because ... there is no doubt [that] something big does help the president" in the 2012 campaign.

A former House Republican leadership aide, John Feehery, said the Democrats might also prefer a smaller deal that preserves their ability to attack Republicans on Medicare and Social Security.

"A big deal screws up a lot of campaign commercials," he said.

Material from The Associated Press was used in this report

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