During a closed-door meeting Monday with rank-and-file Republicans, House Speaker John Boehner is expected to outline a two-step process for raising the debt ceiling -- an approach rejected by President Obama -- as congressional Democrats prepare to unveil their own proposal for reducing deficits.
Both the House and Senate are heading toward Wednesday votes on competing frameworks for reducing deficits, as Congress struggles to coalesce around a plan to raise the nation’s debt limit by next week. The nation now risks not only catastrophic default if the Treasury runs out of money Aug. 2, but a serious downgrading of the nation’s credit worthiness, a move that ratings agencies have warned could come sooner if Congress fails to act.
The Boehner plan draws on the House GOP-passed measure that was rejected by Senate Democrats and faced a veto threat from Obama.
It would cut $1.2 trillion from the budget and cap discretionary spending, while establishing a congressional committee that would recommend as much as $1.8 trillion in future cuts to be voted on by Congress. The proposal also would require the House and Senate to vote later this year on a balanced-budget amendment to the Constitution that would be sent to the states for ratification, a measure that is unlikely to pass.
If approved, the GOP proposal would allow a vote to raise the debt limit by about $1 trillion now, which would cover the nation’s bills for about eight months. A second debt-ceiling vote would be taken after the new committee recommends future cuts.
The Boehner proposal borrows from an earlier proposal offered by Sen. Mitch McConnell of Kentucky, the Republican leader, by allowing Congress to reject the president’s debt-ceiling increase --an approach that puts the responsibility for the higher debt limit on the president. That plan was roundly rejected by House Republicans, but is likely to gain favor if the spending cuts are attached, as Boehner is proposing.
The White House has staunchly refused the two-step process, saying the nation cannot risk the fiscal turmoil of another congressional debate over raising the debt ceiling, especially as the 2012 election season approaches.