President Obama wanted a debt deal to be ready next week to allow time to draft the measure in time for it to maneuver its way through the House and the Senate before August 2nd, but that day is quickly approaching and a path forward is still unclear.
Congressional leaders and the President continue their talks. They met Thursday afternoon for a little more than an hour. Another meeting was not scheduled and the President will hold a news conference tomorrow at 11am.
Treasury Secretary Timothy Geithner met with Senate Democrats today, and at a press briefing following the meeting he said “we are out of time” and must raise the debt ceiling.
Democratic Whip Richard Durbin (IL) said failure to raise the debt ceiling would be “catastrophic.” Democrats said the U.S. would have to choose which payments to make. “Interest payments or payments to troops? Cancer research or Medicare benefits?” Senate Majority Leader Harry Reid (D-NV) asked rhetorically.
Meanwhile, the House Republican leadership is continuing to demand spending cuts larger than the debt ceiling increase, no increases in taxes and structural changes to the budget. They say the best way to change the budget process is to amend the constitution to require a balanced budget.
“I hope the President and Democratic leaders can make sure we can pass this and send it to the states” for ratification House Speaker John Boehner (R-OH) said at a news conference with GOP freshman.
The House will debate and vote on a balanced budget amendment next week.
Meanwhile, Moody’s, the rating agency, put the U.S.’s credit rating under review amid concerns that Washington will be unable to avoid surpassing the debt ceiling and will default on payments.
But as Treasury Secretary Timothy Geithner’s early August deadline approaches, negotiators are holding their ground, rhetoric is ratcheting up, and alternatives are being proposed.
Senator Reid said House Republican Leader Eric Cantor (VA) is “not being constructive” in the debt ceiling negotiations.
At a press briefing, Speaker Boehner defended Rep. Cantor, put his arm around his shoulder and said, “We are in this fight together.”
Lawmakers are also contemplating a proposal by Senate Republican Leader Mitch McConnell (R-KY) that would increase the debt ceiling. Senator McConnell said it is a “last-choice option” but he said the Republicans are "not going to be a party to default” on the U.S. debt.
The proposal would enable the President to unilaterally raise the debt ceiling by $2.4 trillion over the next 18 months. But the President would first have to ask Congress’ permission three different times. Congress could then vote on a “resolution of disapproval” of the President's request, clearing lawmakers from having to vote on raising the debt ceiling. If the President vetoes the disapproval, the veto could be overridden by a minority of lawmakers - one-third plus one in either legislative body – thus allowing the President to raise the debt ceiling.
Some members of his own party have been less-than enthusiastic about the idea. At her press conference Wednesday, Rep. Michele Bachmann (R-MN) called it “smoke and mirrors.” But others are more open. Speaker Boehner said, "It's worth keeping on the table."
President Obama received unfavorable reviews from Republican lawmakers for telling CBS News Tuesday that he “cannot guarantee” that benefits checks will go out August 3rd.
Rep. Bachmann said the President’s statements are “dangerous.” She also joined two Republican colleagues to introduce a proposal, which she says would allow Congress to avoid raising the debt ceiling. It would “prioritize” U.S. spending by paying interest on debt first and military pay second, should the debt ceiling be reached.
The U.S. is expected to receive about $200 billion per month but has about $360 billion dollars worth of obligations. The proposal would prioritize which programs would be funded and which would not in the event of a default.