McConnell unveils complex plan to avoid default on debt

Sen. Mitch McConnell, the Republican minority leader who hinted over the weekend that he had a “contingency” plan for raising the federal debt limit, rolled it out Tuesday moments before all sides convened for another round of talks at the White House.

McConnell unveiled a complicated legislative strategy that would allow Congress to vote against raising the debt limit, let President Obama veto the measure, and then hold a vote to override the veto, which requires a two-thirds majority to pass.

The proposal is designed to avert a federal default while pinning political responsibility for raising the debt limit on those who agree to do so–likely the president and his fellow Democrats.

The plan would allow Republicans to vote en masse against a debt-limit increase, without risking a default by federal government on its debt obligations, and it would force Obama to continue to seek debt-limit increases well into the election year.

It would require President Obama to request a $2.5 trillion increase in three separate stages between now and the summer of 2012. Each time, Congress could pass a “measure of disapproval”--backed largely by Republican votes--to reject the request. Obama could then veto that measure and his request would be de facto approved. The veto could only be overriden by a supermajority in both houses of Congress.

McConnell said the proposal was not his “first choice,” but that he was compelled to offer an alternative to break through the stalemate and avoid a financial crisis that experts say would come with a first-ever default.

Republicans are demanding steep spending cuts in a deficit-reduction plan in exchange for their vote to raise the nation’s $14.3 trillion debt ceiling, which is needed to continue paying already accrued bills.

But under McConnell’s plan, while the White House would be required to submit a list of spending cuts along with his debt-limit-increase requests, there would be no mechanism to enforce those cuts because Congress would not be passing an affirmative piece of legislation in rejecting the request.

That means that an increase could come “clean” without corresponding cuts, a notion that may not sit well with House Republicans.

Senate Majority Leader Harry Reid (D-Nev.) said at a press conference Tuesday that he would not rule out McConnell’s proposal.

“I’m happy to take a look at it,” Reid said.”He and I have had a number of meetings over the last few weeks, talking about the concern we both have. And I will be happy to give this consideration--his suggestion every consideration.

President Obama wants reductions in deficits to be achieved by new taxes on wealthier Americans, a position Republicans have rejected. McConnell delivered a blistering speech on the Senate floor earlier Tuesday, suggesting that the prospects of striking a deal with the White House are grim.

Congress needs to vote by Aug. 2, Treasury has said, to avoid a federal default.