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

 

 

The comments came as the U.S. Congress appeared to remain at a loss over how to keep the United States from defaulting next week for the first time.

The challenge facing any plan for reducing the debt was underscored when a new Republican proposal to raise the ceiling on federal borrowing was met Monday with misgivings by some conservatives and skepticism by many GOP freshmen. That called into question whether Boehner could get even his own caucus to back his approach.

As Boehner tried to rally support for his two-step plan to cut $3 trillion in spending, Senate Majority Leader Harry M. Reid (D-Nev.) offered a strikingly similar proposal for increasing the debt limit before the Aug. 2 deadline. The two leaders, however, remained bitterly divided over Boehner’s demand to hold another vote next year to further expand the government’s borrowing authority.

With financial markets warily watching the Capitol Hill drama, Obama used his 15-minute address from the White House to urge “shared sacrifice” in tackling the debt, calling for deep cuts in federal spending to be coupled with higher taxes on the wealthy and on large corporations.

He slammed Boehner for calling for another vote on the issue next year, saying: “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.”

Boehner countered with a shorter speech from the Capitol, in which he blamed the fiscal crisis on Washington’s spending and urged deep cuts to cure it. He said Reid’s plan lacks the kind of real spending cuts needed for the government to operate within its means.

While the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill,” Boehner said, predicting his approach would prevail.

The government has exceeded its $14.3 trillion debt limit, and Treasury Secretary Timothy F. Geithner has said that without action by Aug. 2, the government will not be able to pay its bills. Credit-rating firms warned that they could downgrade the U.S. debt, which could spur higher interest rates and cause aftershocks in global markets.

Absent an agreement between Boehner and Reid, the House and the Senate are headed for a high-wire act this week.

With neither leader certain he could rally the votes to win, Boehner was making the first move for a possible Wednesday vote. With few House Democrats expected to support his approach, Boehner would need the support of an overwhelming majority of his 240-member conference.

Those hopes were dampened by conservative opposition to the plan, highlighted by Jordan, who leads a conservative caucus of more than 170 GOP members. Jordan is one of 39 House Republicans who previously took a pledge vowing to increase the debt ceiling only in return for Congress sending to the states a constitutional amendment requiring a balanced budget.

Reid’s measure faces its own hurdles because Republicans criticize some of his savings as accounting tricks. So Reid continued private talks with Senate Republicans in an effort to modify Boehner’s package to make it more palatable to Obama, who has previously said he would veto any proposal that provided only a short-term increase in the debt ceiling.