July 27th, 2011
09:20 PM ET
House vote on Republican debt plan set for Thursday
By Alan Silverleib and Tom Cohen, CNN
July 28, 2011 -- Updated 0307 GMT (1107 HKT)
Washington (CNN) -- Competing Democratic and Republican plans to reduce federal deficits and raise the debt ceiling were subjected to a fresh round of criticism Wednesday, as signs of disarray emerged in a House Republican caucus split between unhappy conservatives and a leadership struggling to maintain party unity.
"Get your ass in line," House Speaker John Boehner told his fellow Republicans in the face of divisive infighting over his latest proposal, two GOP sources who attended a Wednesday morning meeting told CNN on condition of not being identified.
The House scheduled a vote on the plan for Thursday in what will be a major test for whether the GOP caucus can push through the Boehner measure in the face of an expected unified Democratic opposition. Republicans hold 240 of the 433 votes to be cast and need 217 of their members to support the plan for it to pass. Two House seats are currently vacant.
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Meanwhile, the nonpartisan Congressional Budget Office said that revisions to Boehner's plan would bring a total of $915 billion in savings over 10 years, an increase of about $65 billion over the initial version. With the revisions, Boehner's proposal -- which calls for an immediate $900 billion increase in the debt ceiling -- now meets his pledge to match any debt ceiling hike with dollar-for-dollar spending cuts.
However, a letter Wednesday from Senate Democrats said the Republican plan has no chance of passing the Senate. For their part, top Republicans called the Democratic plan a nonstarter.
As the politicians bickered, the clock continued to tick down. If Congress fails to raise the current $14.3 trillion debt limit by August 2, Americans could face rising interest rates and a declining dollar, among other problems.
As the cost of borrowing rises, individual mortgages, car loans and student loans could become significantly more expensive. Some financial analysts have warned of a potential stock market crash and a downgrade of America's triple-A credit rating.
Without an increase in the debt limit, the federal government will not be able to pay all of its bills next month. President Barack Obama recently indicated he can't guarantee Social Security checks will be mailed out on time.
With no deal in sight and six days before potential default, the Dow Jones Industrial average fell 198 points on Wednesday.
A CBO analysis released Wednesday morning concluded that the Democratic plan put forward by Senate Majority Leader Harry Reid would reduce deficits over the next decade by $2.2 trillion -- $500 billion short of promised savings of $2.7 trillion. Democrats have been claiming their plan would meet the GOP demand that total savings should at least match the debt ceiling increase sought by the government to last through 2012.
On Tuesday, the CBO reported that the most recent proposal from Boehner, R-Ohio, would cut spending by $850 billion rather than the $1.2 trillion proponents claimed it would save, and below the $900 billion increase in the debt ceiling included in the measure. The revised version analyzed Wednesday by the CBO solved that problem.
Boehner's plan also calls for at least another $1.6 trillion in deficit reduction partly through tax and entitlement reforms to be proposed by a congressional commission, and would authorize a further extension of the debt ceiling at that point.
Lawmakers in both parties seized on the CBO reports to attack the other side.
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Michael Steel, spokesman for Boehner, said Wednesday that the analysis of Reid's proposal "shows the Senate plan for what it is: a grab-bag of gimmicks that gives the president a blank check."
Democrats responded by arguing that Reid's plan has more guaranteed savings than Boehner's. They also promised that the final version of Reid's bill will include more savings.
Beneath the harsh partisan rhetoric, there have been signs of a growing recognition of a need for further compromise. Senate Minority Leader Mitch McConnell, R-Kentucky, called Tuesday for renewed negotiations with Obama, and indicated that his party must be willing to move away from some of its demands.
"We are going to have to get back together and get a solution here," McConnell said. "We cannot get a perfect solution, from my point of view, controlling only the House of Representatives. So I am prepared to accept something less than perfect because perfect is not achievable."
Sources close to the negotiations told CNN that Vice President Joe Biden is very much in the mix of the back-channel conversations that were occurring on a possible fallback position.
"There is no secret deal waiting in the wings," one of the sources said Wednesday night. "But there are talks with everyone at the moment."
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As for McConnell, he, too is engaged in trying to figure out a way forward if neither of the current bills being considered can get enough support to get through both chambers. McConnell has said he supports the bill pushed by Boehner, but some sources have said if that plan cannot get through the Senate, McConnell will be a key person in trying to forge a compromise plan.
A source close to McConnell said he is talking with Biden "from time to time," but cautioned that "they're not negotiating or working on a deal."
In other words, the source said, "they communicate," but "they're not in talks."
Obama made a nationally televised plea for compromise Monday night but also ripped the GOP for failing to agree to tax hikes on the wealthy.
"This is no way to run the greatest country on Earth," the president said. "The American people may have voted for divided government, but they didn't vote for a dysfunctional government."
As for Boehner's plan, it appeared to be in danger of failing to win approval from the GOP-controlled House -- a development that would weaken the party's negotiating leverage on a final deal -- before the revisions analyzed Wednesday by the CBO. By the end of the day, some House Republicans indicated they might change their mind and support the measure to increase its chances for passing.
Nevertheless, the letter to Boehner signed by all 53 member of the Senate Democratic caucus made clear that they will reject the plan if it gets to the Senate.
"Your approach would force us once again to face the threat of default in five or six short months," the letter said, arguing that would bring a downgrade in the U.S. credit rating that would "cost us billions of dollars more in interest payments on our existing debt and drive up our deficit."
The Democratic senators also warned that the Boehner plan would enable House Republicans to next year "once again hold the economy captive and refuse to avoid another default unless we accept unbalanced, deep cuts to programs like Medicare and Social Security, without asking anything of the wealthiest Americans."
"We must work together to avoid a default the responsible way -- not in a way that will do America more harm than good," the letter concluded.
At their caucus meeting earlier Wednesday, House Republicans argued over a full-blown revolt among rank-and-file conservatives who believe the speaker's plan doesn't do nearly enough to slow the growth of government.
Several members were furious when they learned that staff members for the Republican Study Committee -- a group of fiscally conservative legislators -- had sent e-mails to outside groups encouraging them to put pressure on fellow Republicans to oppose Boehner's plan.
Ohio Republican Jim Jordan, who heads the committee, apologized at the start of the meeting, indicating his staff sent the e-mails without his knowledge, according to GOP sources. After Jordan spoke, several members shouted out that Jordan's top aide, Paul Teller, should be fired.
House GOP sources told CNN that one of the e-mails, sent by a junior study committee staffer, included a target list of 30 committee members and urged the outside groups to lobby against those Republicans back in their districts. In addition, Teller e-mailed these groups after a GOP meeting Tuesday to alert them that the House GOP plan, which Jordan had already publicly opposed, was gaining support.
One of the targeted committee members, Indiana Rep. Todd Young, asked why he was paying dues to a group that was now attacking him. Oregon Rep. Greg Walden read Teller's e-mail out loud and asked him to explain, but according to Republicans in the meeting, Teller declined.
Brian Straessle, spokesman for the Republican Study Committee, apologized in a statement, saying the e-mail campaign was not authorized by Jordan or members of the committee staff.
Jordan told CNN on Tuesday that he opposed Boehner's plan because it was weaker than an earlier "cut, cap and balance" measure that was passed by the House but dismissed by the Democratic-controlled Senate.
"I'm not voting against the speaker, but I'm voting against this plan," Jordan said. Asked if Boehner had the votes to pass the measure in the House, Jordan said: "I don't think so now."
A group of conservative senators released a letter Tuesday calling the Boehner plan insufficient, and arguing that Republicans should reject it in favor of the "cut, cap and balance" plan previously passed by the House and dismissed by the Senate.
"For many reasons, we cannot support this bill and urge you to protect the American taxpayers by strongly opposing this bill," said the letter from Republican Sens. Jim DeMint of South Carolina, Rand Paul of Kentucky, Mike Lee of Utah and David Vitter of Louisiana.
The White House, meanwhile, released a statement noting that Obama's senior advisers will recommend a veto if Boehner's bill reaches the president's desk. Obama has endorsed Reid's plan, but has also acknowledged it has little chance of getting passed in the GOP-led House.
Both the Reid and Boehner plans provide a path to raise the debt ceiling through the end of 2012, but differ in terms of scope and requirements for future congressional action.
Reid's blueprint calls for roughly $2.7 trillion in savings over the next decade -- the assertion now called into question by the Congressional Budget Office -- while also raising the debt limit by $2.7 trillion, an amount sufficient to fund the government through the next election.
Democrats insist it would be economically dangerous to force a repeat of the current debt ceiling debate in the middle of a presidential campaign; Republicans accuse the Democrats of putting Obama's electoral considerations before the national welfare.
Reid's plan would cut spending by $1.8 trillion as part of the total $2.2 trillion in savings, according to the CBO. Roughly $1 trillion in the savings are based on the planned U.S. withdrawals from military engagements in Afghanistan and Iraq. Limiting future discretionary spending would save another $751 billion, and an estimated $375 billion would be saved in interest payments due to reduced borrowing because of the spending cuts.
Reid's plan also would establish a congressional committee made up of 12 House and Senate members to consider additional options for debt reduction. The committee's proposals would be guaranteed by a Senate vote with no amendments by the end of the year.
Reid has insisted his plan meets key GOP demands such as no increased taxes. Boehner, however, argued this week that Reid's "doesn't deal with the biggest drivers of our deficits and debt" -- popular entitlement programs such as Medicare.
Boehner's plan, on the other hand, would require two separate votes by Congress to increase the debt ceiling in a package that was intended to include approximately $1.2 trillion in spending cuts over the next decade while setting up a special congressional committee to recommend additional savings of $1.6 trillion or more.
Any failure on the part of Congress to enact the mandated spending reductions would trigger automatic across-the-board budget cuts.
The plan also calls for a congressional vote on a balanced budget amendment to the Constitution by the end of the year. It would allow for combined debt ceiling increases of up to $2.5 trillion.
Cafferty: Why won't government listen to the people?
A CNN/ORC International Poll reveals a growing public exasperation and demand for compromise. Sixty-four percent of respondents to a July 18-20 survey preferred a deal with a mix of spending cuts and tax increases. Only 34% preferred a debt reduction plan based solely on spending reductions.
According to the poll, the public is sharply divided along partisan lines; Democrats and independents are open to a number of different approaches because they think a failure to raise the debt ceiling would cause a major crisis for the country. Republicans, however, draw the line at tax increases, and a narrow majority of them oppose raising the debt ceiling under any circumstances.
CNN's Ted Barrett, Kate Bolduan, Keating Holland, Brianna Keilar, Gloria Borger, Jeanne Sahadi, Xuan Thai and Deirdre Walsh contributed to this report.
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