As the nation stood Friday on the edge of a historic default and markets sank amid grim economic news and the legislative chaos, President Obama called on both Democrats and Republicans to abandon their favored debt-ceiling plans and come together to find a last-minute deal.
“What has become clear is that any solution to avoid default must be bipartisan,” Obama said from the White House.
His remarks came a day after an effort by House Speaker John Boehner to pass his own GOP-backed proposal to raise the nation’s debt-ceiling stalled in humiliating fashion, leaving Republicans regrouping and Democrats in the Senate poised to offer their own plan.
As both chambers continued to struggle to come up with a way to fashion a bill that can clear both houses, and a new report showed the economy growing at a snail’s pace, stocks on Wall Street tumbled at opening, falling 130 points. Late morning, however, brought a rally.
Senate Majority Leader Harry Reid, whose caucus was poised to kill the Boehner bill the minute it passed the House, said Friday that he was going to attempt to advance his own legislation in the hope that it would be the last proposal standing before Tuesday, when the government’s borrowing authority expires.
“This is likely our last chance to save this nation from default,” Reid said on the Senate floor.
Boehner and House Republicans spent Friday morning huddling, attempting to determine whether a path forward for the speaker’s bill still existed — and were still reeling from a chain of events that saw Boehner pull his proposal from the floor at the last moment after it became clear he lacked enough GOP support.
Conservatives are pressing for a provision that would make a second-stage hike in the debt ceiling contingent on the passage of a balanced budget amendment to the Constitution.
Inclusion of balanced-budget amendment language had been a deal-breaker for Rep. Mo Brooks of Alabama, who had been a no. “Now I’m a yes,” he said Friday.
Party leaders were still hopeful for an afternoon vote. But as was the case Thursday, Senate Democrats were poised to use a procedural mechanism to kill it immediately, clearing the field for Reid’s package. If Democrats disliked the Boehner bill last night, the balanced-budget requirement was likely to make it even more unpalatable.
Even some Republicans in the House admitted that that was a likely result.
“I think the play we called yesterday was the better play because it had a better chance of passing the Senate,” said Rep. Steve Womack of Arkansas. “This new play gives a lot more power to the Senate.”
Boehner told his caucus as much in a closed-door meeting Friday — that they were surrendering leverage — but many were not dissuaded.
“Was it a lesson? Yeah, it was a lesson. But some people still don’t quite get it,” said Ohio Rep. Steve LaTourette, who has supported the House bill.
The influential Club for Growth however, said that a balanced-budget provision would cause it to withdraw its opposition — which could clear the way for more conservatives to support it.
Obama, speaking from the White House Diplomatic Room, labeled Boehner’s bill a waste of valuable time.
The Boehner bill would slice nearly $1 trillion in spending as a first step in raising the debt ceiling, then would empower a bipartisan committee to seek deep cuts in federal entitlements and elsewhere in a second stage. It would likely lead to another showdown next year.
“It does not solve the problem, and it has no chance of becoming law,” Obama said Friday.
Obama, instead, made it clear that he saw the Senate as the venue for crafting a workable bipartisan package. Reid conceded Friday that his proposal, which would reduce the deficit by some $2.2 trillion, would have to be reworked to attract GOP support. Republicans senators have vowed to filibuster the bill.
“I have invited Sen. [Minority Leader Mitch] McConnell to sit down with me, and to negotiate in good faith knowing the clock is running down. I hope will accept my offer,” Reid said.
Reid’s plan would raise the debt ceiling enough to carry the government through 2012. The compromise talks have focused on several proposals for elaborate “trigger” mechanisms that would try to guarantee that additional deficit-reduction measures would be voted on, but would not hold the debt ceiling hostage to those votes.
Any such compromise likely could only pass the House if a coalition of Democrats and Republicans can come together to support it.
Despite Reid’s vow to kill the House bill, Boehner, along with his lieutenants, hope that successfully passing it Friday afternoon will give his side leverage in talks that likely will go down to the wire over the weekend and into next week.
After an evening in which Boehner and House leaders frog-marched recalcitrant legislators into his office for some old-fashioned arm-twisting, the House speaker, whose position could be on the line, was in a forgiving mood Friday.
“I love all of you,” he joked to his caucus. “But I love some of you more than others.”