With eight days left until the Aug. 2 deadline set by the Treasury, Washington has yet to reach a compromise on increasing the debt ceiling. If a compromise isn't reached by Aug. 2, the United States could for the first time in history default on its debt.
The two parties have abandoned bi-partisan negotiations and gone their separate ways. So House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) have now put forward their own plans.
Update at 4:40 p.m. ET. Obama To Speak:
The White House has announced that President Obama will address the debt-ceiling stalemate in an address tonight at 9 p.m. ET.
Earlier, the White House said it supports the proposal put forward by Senate Majority Leader Harry Reid.
Update at 4:28 p.m. ET. Boehner Announces His Plan:
House Speaker John Boehner (R-OH), backed by a parade of Republican colleagues, appeared before the cameras this afternoon to argue for a two-step plan to end the impasse over raising the government's debt ceiling.
Boehner said the plan he had put forward to House Republicans was a compromise based on both the principles of their previous "cut, cap and balance" plan and on talks with Democrats in the Senate.
He said time is running short to avoid a default, urged his House colleagues to embrace the plan and that it would be irresponsible for President Obama to veto the plan.
When asked about the plan put forward earlier in the day by Senate Majority Leader Harry Reid (D-NV), Boehner dismissed it as "full of gimmicks" and empty on the question of what to do with entitlements.
The AP reports on the details of the Boehner plan:
"House of Representatives Speaker John Boehner unveiled the Republican plan that would raise the borrowing limit by $1 trillion through year's end and permit a larger increase next year. It would require Congress to pass cuts to benefit programs like Medicare health insurance for the elderly and farm subsidies."
"The Republican plan would impose $1.2 trillion in cuts to domestic agencies over the coming decade and establish a special panel of lawmakers to recommend cuts to benefits programs for a vote by the end of December."
Update at 2:41 p.m. ET. Reid Announces His Plan:
Senate Majority Leader Harry Reid (D-NV) unveiled his budget plan during a press conference a short while ago. First taking a shot at Tea Party House members, calling them "extremists," he said it's a deal that leaves Republicans with nothing to say but, "Yes."
As we reported earlier, the plan cuts $2.7 trillion from the deficit over 10 years and it does so without touching Medicare, Medicaid or Social Security to appease Democrats.
Now, here's the kicker: The plan does not include any increase in revenues, which Democrats have insisted on from the beginning, and Republicans have fought against.
Sen. Charles Schumer (D-NY) added that the plan achieves the cuts by adjusting discretionary spending and through $1 trillion in savings from the draw down in the wars in Iraq and Afghanistan.
"If [Republicans] refuse this offer, it means they want to default," Schumer said, adding that taking added revenue off the table was a "tough choice" for Democrats.
"We can pursue revenue later," said Schumer.
House Speaker John Boehner (R-OH) is expected to announce his plan at 4 p.m. ET. His plan is expected to be a two-step solution, which both Reid and Schumer rejected outright during the press conference, saying that a deal like that puts the country's debt rating at risk.
Our original post:
With eight days left until the Aug. 2 deadline set by the Treasury, Washington has yet to reach a compromise on increasing the debt ceiling. If a compromise isn't reached by Aug. 2, the United States could for the first time in history default on its debt.
After House Speaker John Boehner (R-OH) walked out of talks with President Obama on Friday, the two-parties negotiated over the weekend and bickered over a short-term extension. The Republicans offered one but the White House and congressional Democrats said they wanted a plan that would get the country past the 2012 elections.
At this point, the two parties have abandoned bi-partisan negotiations and gone their separate ways. So Boehner and Senate Majority Leader Harry Reid are crafting their own plans.
NPR's Cokie Roberts told Morning Edition host Steve Inskeep that the difference between the plans being crafted now and something like the "Cut, Cap and Balance" bill that House Republicans passed last week is that "the plans are ones that can be compromised."
Cokie said that realistically, it looks like this Congress will reach deal by the deadline; it looks like they "really mean it" when they say they don't want to put the full faith and credit of the United States at risk.
NPR's Andrea Seabrook added that right now the plans being crafted are sketchy, so there's no way to know exactly what is in them, but it's safe to say that the Republicans are working on a plan that would raise the debt ceiling enough to keep the country going until the end of the year, while Democrats are working on a plan that makes significant cuts and keeps the country going into 2013.
With that in mind, here are sketches of the plans:
-- USA Today reports Reid's plan would raise the debt limit by $2.4 trillion, while cutting $2.7 trillion in future spending.
-- Boehner's plan, reports The New York Times, would raise the debt ceiling, include $1 trillion in cuts and "that would be followed by future cuts guided by a new legislative commission that would consider a broader range of trims, program overhauls and revenue increases."
The Hill reportsthat the Senate Tea Party Caucus and House freshmen are discussing a plan B in case the deadline is not met. The bill would require "Obama to prioritize federal payments to the nation's creditors, Social Security recipients and soldiers serving in Afghanistan and Iraq."
Another thing to keep an eye on today is, of course, the markets. As Cokie told Steve this morning, in some ways it may take a plummet in the markets to force a compromise the way it did when Congress failed to pass TARP and the market went into free fall, dropping 700 points.
Early indications are that the markets are, indeed, reacting to the political impasse. As the markets opened, the Dow was down about 100 points, Nasdaq 18 or .63 percent and the S&P 500 was down 10 or .75 percent.
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