November 25, 2020

Deadline Passes as Debt Ceiling Talks Languish

The dueling plans emerged after Mr. Boehner walked away from negotiations with the White House on Friday, leading to a frustrating weekend of talks in heat-scorched Washington. The leaders of both parties variously negotiated together over the phone, talked separately, conferred with their caucuses and tried to plot an end to the debt crisis that would assure the capital markets around the world that America would meet its debt obligations.

As the Aug. 2 deadline for lifting the debt ceiling nears, warnings are growing that the nation’s economy may be damaged by the protracted stalemate. A downgrade of the nation’s credit rating, which could raise the cost of borrowing, seemed more likely, deal or no deal.

Mr. Reid, the Senate’s top Democrat, was trying on Sunday to cobble together a plan to raise the government’s debt limit by $2.4 trillion through the 2012 elections, with spending cuts of about $2.7 trillion that would not touch any of the entitlement programs that are dear to Democrats or raise taxes, which is anathema to Republicans.

President Obama could endorse such a plan, even though it would fall far short of the ambitious goal of deficit reduction and entitlement changes that he says are necessary to shore up the nation’s finances.

At the White House on Sunday evening, Mr. Obama spent about an hour meeting in the Oval Office to try to hash out details of the Democratic proposal with Mr. Reid and the House Democratic leader, Nancy Pelosi. The two emerged from the meeting with nothing to say to the throngs of reporters who had been encamped there for the third consecutive weekend, awaiting an agreement on the debt ceiling.

But administration and Congressional officials said that during the meeting, Mr. Obama and the Democratic leaders had resolved to hold firm against any short-term agreement that did not raise the debt ceiling beyond next year’s presidential elections.

“You see how hard this is right now,” one administration official said Sunday night. “Can you imagine going through this again in six months?”

That means, officials say, that Mr. Reid’s proposal may gather steam as the only viable alternative that is palatable to the administration.

The contours of Mr. Boehner’s backup plan were not entirely clear, but it seemed likely to take the form of a two-step process, with about $1 trillion in cuts, an amount the Republicans said was sufficient to clear the way for a debt limit increase through year’s end. That would be followed by future cuts guided by a new legislative commission that would consider a broader range of trims, program overhauls and revenue increases.

“The preferable path would be a bipartisan plan that involves all the leaders, but it is too early to decide whether that’s possible,” Mr. Boehner said in a “Fox News Sunday” interview. “If that’s not possible, I and my Republican colleagues in the House are prepared to move on our own.”

In a conference call with Republican lawmakers that lasted over an hour on Sunday night, Mr. Boehner said he was seeking “a vehicle that can pass in both houses,” according to someone on the call, who added that Mr. Boehner had made an emotional appeal to his fellow Republicans to stick together. “If we’re divided,” he said, “our leverage gets minimized.”

One freshman lawmaker on the call described Mr. Boehner as sounding weary and said many Republicans were focused on some version of a balanced budget amendment, which was already passed by the House as part of broader legislation but then rejected by the Senate.

For the White House, the Reid proposal represents a Hail Mary pass that is meant to, at the very least, avoid putting the country through a repeat of the debt ceiling negotiations next year, an election year.

Jackie Calmes contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=7f007ac112b17d59cd800dcc7f74ae7b

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