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Congress / BUDGET

Debt Talks Splinter Into Dueling Plans

House Republicans focus on balanced-budget amendment as an option.

Minority Leader Mitch McConnell worries that the political fallout of not raising the debt ceiling could harm his party.(Alex Wong/Getty Images)

photo of Dan  Friedman
July 13, 2011

Even as negotiators trooped back to the White House on Wednesday for more talks, efforts to raise the federal debt limit have splintered into competing plans from different chambers as congressional leaders moved to avoid blame for a potential default without making clear progress on a passable compromise.

House Republicans leaders have begun touting a vote next week on a balanced-budget amendment as part a plan to force cuts that allow raising the $14.3 trillion debt ceiling. According to two sources, GOP leaders are considering linking balanced-budget amendment, which is unlikely to win approval, to a debt ceiling increase.

House Speaker John Boehner, R-Ohio, said on Wednesday that “adoption of the balanced-budget amendment would help ensure” the spending cuts Republicans demand before raising the debt limit.

 

(RELATED: Bernanke Skirts Tug of War over Debt Ceiling)

Citing conversations with House Republicans, Sen. Jim DeMint, R-S.C., said on Wednesday that Republicans senators working on a “cut, cap, and balance” plan “believe the House is gonna pass a bill that raises the debt limit and cuts spending, all contingent on balancing the budget.”

But with approval of a balanced-budget amendment, which would need 67 Senate votes to pass, not a real probability, tying a debt-ceiling increase to its passage would be a symbolic act that still would not get lawmakers out of their dilemma.

(RELATED: How Baseball Helps Explain the Debt Ceiling Talks)

Meanwhile, Senate GOP leaders continued on an alternative course. Minority Leader Mitch McConnell, in an interview with conservative radio host Laura Ingraham, defended his plan to allow President Obama to raise the debt ceiling without GOP votes.

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Facing an onslaught of conservative opposition, he defended his proposal in candidly political terms. A default would “destroy” the GOP “brand" and "give the president an opportunity to blame Republicans for the bad economy,” McConnell said.

“He will say Republicans are making the economy worse,” McConnell said, referring to President Obama. “It is an argument that he could have a good chance of winning, and all of the sudden, we have co-ownership of the economy. That is a very bad position going into the election.”

(RELATED: Analysis—Want to Cut Deficit? Start with Nukes)

McConnell on Tuesday suggested that if no deal is near by the August 2 deadline set by the Treasury Department, Congress could pass a bill granting Obama power to raise the debt limit on his own in three steps over the next year, in  “tranches totaling $2.5 trillion." Under the plan, the plan the president's request for greater borrowing authority would be subject to a resolution of disapproval, which both chambers would likely pass. Obama would have to veto the resolution, forcing some Democrats  in each chamber vote for the increase to avoid a veto override. Obama would be required to submit proposed spending cuts with the request, but those would be left to appropriators to try to enact.

While the White House avoided substantive comment on McConnell's plan on Wednesday, it won a tepid embrace from top Democrats.

“What … Leader McConnell  has put on the table recognizes that we must lift the debt ceiling, that we must do that, so it has that merit,” said House Minority Leader Nancy Pelosi, D-Calif.

Senate Majority Leader Harry Reid, D-Nev., on Wednesday called the plan “something we have to look at every closely” and “a serious proposal.”

Reid has suggested steps to make the plan more palatable to the GOP, including a bipartisan panel to suggest deficit cuts.

“The Republican Leader’s proposal combined with ideas he and I have been discussing to force a vote on deficit reduction proposals could go a long way toward resolving the impasse we now find ourselves in,” Reid said.

Negotiators said Wednesday’s White House meeting would focus on the relatively narrow areas of potential consensus on spending cuts, rather than attempt to resolve the broader disputes that prevent a $2.5 trillion deal that would prevent another debt ceiling vote before the 2012 election.

“We’re going go over again what levels of mandatory savings we think we can agree to, and then I presume the discussion will also turn to discretionary savings,” said Senate Minority Whip Jon Kyl, R-Ariz.

Billy House and Katy O'Donnell contributed contributed to this article.

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