Decrying a "partisan three-ring circus" in the nation's capital, President Barack Obama Monday night criticized a newly minted Republican plan to avert an unprecedented government default and said congressional leaders must produce a compromise that can reach his desk before the Aug. 2 deadline.
"The American people may have voted for divided government, but they didn't vote for a dysfunctional government," the president said in a hastily arranged prime-time speech. He appealed to the public to contact lawmakers and demand "a balanced approach" to reducing federal deficits.
Obama stepped to the microphones a few hours after first Republicans, then Democrats drafted rival fallback legislation Monday to avert a potentially devastating government default in little more than a week.
Obama said the approach unveiled earlier in the day by House Speaker John Boehner would raise the nation's debt limit only long enough to push off the threat of default for six months. "In other words, it doesn't solve the problem," he said. The president had scarcely completed his remarks when Boehner made an extraordinary rebuttal carried live on the nation's networks.
"The president has often said we need a 'balanced' approach, which in Washington means we spend more, you pay more," the Ohio Republican said, speaking from a room just off the House floor. "The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen."
Directly challenging the president, Boehner said there "is no stalemate in Congress." He said the Republicans' newest legislation would clear the House, could clear the Senate and then would be sent to Obama for his signature.
The back-to-back televised speeches did little to suggest that a compromise was in the offing, and the next steps appeared to be votes in the House and Senate on the rival plans by mid-week. Despite warnings to the contrary, U.S. financial markets have appeared to take the political maneuvering in stride — so far. Wall Street posted losses Monday but with no indication of panic among investors.
Without signed legislation by day's end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could badly harm a national economy struggling to recover from the worst recession in decades.
Obama wants legislation that will raise the nation's debt limit by at least $2.4 trillion in one vote, enough to avoid a recurrence of the acrimonious current struggle until after the 2012 elections. Republicans want a two-step process that would require a second vote in the midst of a campaign for control of the White House and both houses of Congress.
Can’t We All Get Along?
There were concessions from both sides embedded in the competing legislation, but they were largely obscured by the partisan rhetoric of the day. Senate Republican leader Mitch McConnell of Kentucky urged Obama to shift his position rather than "veto the country into default." And Reid jabbed at tea party-backed Republicans who make up a significant portion of the House GOP rank and file. The Nevada Democrat warned against allowing "these extremists" to dictate the country's course."
The measure Boehner and the GOP leadership drafted in the House called for spending cuts and an increase in the debt limit to tide the Treasury over until sometime next year. A second increase in borrowing authority would hinge on approval of additional spending cuts sometime during the election year.
Across the Capitol, Reid wrote legislation that drew the president's backing, praise from House Democratic leader Nancy Pelosi — and criticism from Republicans. By design or not, the two sides' harsh remarks obscured concessions that narrowed the differences among the nation's political leaders as they groped for a way to resolve the economic crisis.
With their revised plan, House Republicans backed off an earlier insistence on $6 trillion in spending cuts to raise the debt limit. And Obama jettisoned his longstanding call for increased government revenues as part of any deficit reduction plan. Pending the president's televised speech, the White House also declined repeatedly to say whether Obama would veto the revised House measure.
White House communications director Dan Pfeiffer said the proposal was "not a serious attempt to avert default because it has no chance of passing the Senate." Not all Republicans were happy with their leadership's decision to scale back legislation that had cleared the House last week, only to die in the Senate.
Among House conservatives who have provided the political muscle for the Republican drive to cut spending, the revised legislation was a disappointment. "I cannot support the plan," said Rep. Jim Jordan of Ohio, one of the leading advocates of legislation that cleared the House last week and died in the Senate. But two rank-and-file Republicans said their constituents were voicing concerns other than the rising federal debt.
Rep. Tom Rooney, R-Fla., said his office is getting calls from constituents saying, "If I don't get my Social Security check, it's your fault." Rep. Tom Reed, a New York freshman, said many of his constituents are telling him to stand firm in his drive to cut spending. "But I will admit there's some anxiety in the district" about Social Security and other programs, he added.
The Small Print
As Boehner readied his legislation, Senate Democratic leaders called a news conference to announce their own next steps. The Democrats' measure would cut $2.7 trillion in federal spending and raise the debt limit by $2.4 trillion in one step — enough borrowing authority to meet Obama's bottom-line demand.
The cuts include $1.2 trillion from across a range of hundreds of government programs and $1 trillion in savings assumed to derive from the end of the wars in Afghanistan and Iraq. Boehner ridiculed the $1 trillion in war savings as gimmicky, but in fact, they were contained in the budget the House passed earlier in the year.
The legislation also assumes creation of a special joint congressional committee to recommend additional savings with a guaranteed vote by Congress by the end of 2011. Yet in the maneuvering it appeared another of the president's long-held conditions appeared to be in danger of rejection.
Neither Boehner's measure nor the one Reid was drafting included additional revenue, according to officials in both parties. In addition to a two-step approach to raising the debt limit, the House measure would require lawmakers in both houses to vote later this year on a constitutional amendment requiring a balanced federal budget.
An earlier bill, passed in the House last week but then scuttled in the Senate, would have required Congress to approve an amendment and send it to the states for ratification. That same bill would have made $6 trillion in spending cuts in exchange for raising the debt limit. Obama promised to veto that bill even before the House voted on it.
Jockeying for Political Position
Each side offered accounts of secret maneuvering designed to put the other side in a poor light. Democratic officials said Obama called Boehner on Saturday night, one day after the collapse of compromise talks, and offered to reduce his demand for new tax revenue by $400 billion.
In return, Obama said that he wanted Republicans to abandon their demand to cancel parts of the year-old health care law if future deficit cuts did not materialize. This official said Boehner rejected the proposal on Sunday.
Republicans disputed that account — and offered one of their own. In their version of events, Reid agreed on Sunday night to a two-step approach to raising the debt limit that Obama has rejected. Democrats denied it.
None of the officials involved would agree to be quoted by name.
Associated Press writers Andrew Taylor, Donna Cassata, Alan Fram, Ben Feller and Jim Kuhnhenn contributed to this story.