WASHINGTON — With the deadline for raising the
nation’s debt limit and prospects for financial-market panic now a week
away, an impatient, frustrated President Barack Obama warned the nation
Monday night that the partisan impasse risks “sparking a deep economic
crisis, this one caused almost entirely by Washington.”
But House Speaker John Boehner of Ohio, presenting
the case for the Republicans, countered that “the solution to this
crisis is not that complicated. If you’re spending more money than
you’re taking in, you need to spend less of it.”
Obama and the Democrats should just accept the
massive spending cut package pushed by the GOP, Boehner said — but
Obama, he charged, “wants a blank check today.”
Obama’s 15-minute nationally televised address capped
a day when Senate Democrats’ and House Republicans’ positions hardened,
as each group unveiled deficit-cutting plans Monday that showed the two
sides remain sharply divided.
The key conflict dividing the new Republican and
Democratic congressional plans involved the length of any new debt-limit
increase. Republicans in the House of Representatives want to increase
it in two stages, the first a short-term stopgap that would last through
early next year. Democrats want a new ceiling that will last through
the 2012 elections.
Obama took the unusual step of getting specific in criticizing the House GOP plan offered earlier Monday by Boehner.
“A six-month extension of the debt ceiling might not
be enough to avoid a credit downgrade and the higher interest rates that
all Americans would have to pay as a result,” Obama said. “We know what
we have to do to reduce our deficits; there’s no point in putting the
economy at risk by kicking the can further down the road.”
Obama said he was still confident that an accord
could be reached, saying, “Republican leaders and I have found common
ground before.” He called on viewers to urge their lawmakers to
compromise.
But after he finished speaking, Boehner, in a
five-minute address, demonstrated why breaking the impasse has been and
remains difficult.
He criticized Obama for a “massive spending binge,”
including the 2010 health care overhaul. He recalled telling Obama
earlier this year that the American people will not accept a debt limit
increase without significant spending cuts.
Boehner argued, “I’ve always believed the bigger the
government, the smaller the people. And right now, we’ve got a
government so big and so expensive it’s sapping the drive out of our
people and keeping our economy from running at full capacity. The
solution to this crisis is not complicated.”
With no compromise in sight, the two sides positioned
themselves for a showdown later this week over rival broad plans aimed
at reducing future federal budget deficits, estimated to total about $7
trillion over the next decade, while increasing the nation’s $14.3
trillion debt limit.
If the debt limit is not raised by Aug. 2, the
government will exhaust its borrowing authority, which could ignite a
global financial panic and send the American economy reeling.
After another weekend of stalemate, lawmakers feared
markets would stumble Monday. U.S. stocks fell slightly, and analysts
cited concern about the debt limit. The Dow Jones industrial average
fell 88 points, or 0.7 percent, and closed at 12,593.
But those losses provoked no rush to find common
ground on Capitol Hill; instead, lawmakers spent Monday staking out
partisan positions.
“There is absolutely no economic justification for
insisting on a debt-limit increase that brings us through the next
election. It’s not the beginning of a fiscal year. It’s not the
beginning of a calendar year,” said Senate Republican leader Mitch
McConnell of Kentucky.
“Based on his own words, it’s hard to conclude that
this request has to do with anything, in fact, other than the
president’s re-election,” McConnell charged.
White House officials say that passing only a
short-term debt-ceiling increase would fail to lift the cloud of
uncertainty rising from the controversy, which they say makes business
decision-making tentative and contributes to the economic slowdown.
The White House, which backed the Senate Democratic
plan, and Senate Majority Leader Harry Reid of Nevada were equally
disdainful of the GOP position.
White House press secretary Jay Carney said the GOP
was threatening the country with a “my way or the highway” approach,
while Reid insisted “the Republicans short-term plan is a non-starter.”
Both the Republican-controlled House and the
Democratic-dominated Senate prepared to take up partisan plans to raise
the debt limit and cut deficits. First votes are expected Wednesday.
The plans share a number of similarities — both would
cut discretionary spending by $1.2 trillion and set up special
committees to find more savings. And neither plan includes new revenues —
a major concession by Democrats to the GOP’s bottom line.
The 10-year plans’ features include:
—Discretionary spending. Both plans would cut the
same amount from programs like education, transportation and other areas
where lawmakers have discretionary authority over spending.
They would take different paths to the goal. Boehner
would impose spending caps on future spending. Failure to meet those
caps would trigger across-the-board cuts. Reid’s proposal includes no
such caps; presumably lawmakers would seek cuts item by item.
—Entitlements. Both plans would create a special 12-member bipartisan committee to seek more savings.
Boehner’s panel would be required to write
legislation to reduce deficits by another $1.8 trillion over 10 years.
Reid’s plan does not specify a number.
—Debt limit. Boehner would raise the limit first by
up to $1 trillion, about the same amount as the cuts in discretionary
spending, which should give the government authority to borrow through
early next year. Another $1.6 trillion increase could be authorized
after the special joint committee’s plan was adopted. Reid would extend
the debt limit enough to cover through 2012.
—Other savings. Reid’s plan includes $1 trillion
saved by winding down the Iraq and Afghanistan wars. Boehner’s plan does
not; many Republicans say such savings should not be counted because
those savings are coming anyway — even though the budget they adopted in
April included those savings.
—Balanced budget amendment. Boehner would require a
vote on a constitutional amendment requiring the federal budget to be in
balance; the vote would occur between Oct. 1 and congressional
adjournment for this year. Reid omits such a vote.
It was not clear if Boehner’s plan could pass the
House, since many conservative Republicans oppose any increase in the
debt limit, and Democrats oppose his whole approach.
As for the outlook in the Senate, Reid hopes for a
vote on cutting off debate on his plan — a test vote on its strength —
on Wednesday. If all 51 Democrats, plus two independents, side with him,
he still would need seven Republicans to proceed, and it’s unclear if
he’ll get them.
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