Boehner presses debt plan opposed by Democrats; IMF urges debt-limit increase

Boehner presses debt plan opposed by Democrats; IMF urges debt-limit increase - The Washington Post

According to a new poll
, 68 percent of Americ

According to a new poll
, 68 percent of Americans — including majorities across the political spectrum — now say lawmakers should compromise to strike a deal on the debt, up from 55 percent in a poll taken in April.

In his televised address, Obama called for a compromise that reduces the deficit through both spending cuts and increased revenue, while raising the debt ceiling in one step into 2013. Speaking minutes afterward, Boehner (R-Ohio) argued for a plan that would raise the debt ceiling in two steps tied to about $3 trillion in spending cuts.

Shrugging off Obama’s efforts to appeal directly to the public, Boehner pushed for a House vote Wednesday on his two-stage plan and scheduled a second vote Thursday on an amendment to the Constitution requiring a balanced budget. The Boehner plan would extend the debt ceiling initially for about six months. Obama has vowed to veto any such short-term extension, which ratings agencies have said might not be sufficient to avert a downgrading of the United States’ AAA credit rating. A balanced-budget amendment is part of a GOP plan that was approved by the House last week but voted down in the Democratic-controlled Senate. Obama had pledged to veto any such plan that reached his desk.

Boehner told reporters Tuesday that he believes his two-step plan can pass both houses of Congress.

But a leading conservative lawmaker and fellow Ohio Republican, Rep. Jim Jordan, said enough Republicans appear to oppose Boehner’s plan that it would not be able to pass the House on GOP support alone.

In a speech in New York before the Council on Foreign Relations, Christine Lagarde, the new managing director of the IMF, urged American officials to demonstrate the kind of “political courage” she said was shown by European leaders last week in a summit that agreed on new financing for Greece and gave greater powers to a regional bailout fund.

“On the debt ceiling, the clock is ticking, and clearly the issue needs to be resolved immediately,” Lagarde said. “Indeed, an adverse fiscal shock in the United States could have serious spillovers on the rest of the world.” She said a default or downgrading of U.S. debt “would be a very, very, very serious event, not just for the United States but for the global economy at large.”

Lagarde also urged caution in adopting large deficit-reduction measures, saying that “the impact is likely to be negative” in the short term. “Our research has found that a 1 percentage point cut in the deficit could lower growth by about one-half percentage point over two years,” she said. “This is why measures that are legislated now — but only reduce deficits in the future, when the recovery is more robust — would be particularly helpful.”