Debt Ceiling Latest: Will the Rank and File Buy Deal?

By Dschabner

Jul 31, 2011 2:30pm

ap Debt Showdown jt 110731 wb Debt Ceiling Latest: Will the Rank and File Buy Deal?

House Speaker John Boehner advised Republicans in the House that he would brief them on debt ceiling talks during a conference call Sunday afternoon. At the same time, Democrats in the Senate planned to huddle on Capitol Hill and discuss a possible deal to raise the nation’s debt ceiling.

“Discussions are under way on legislation that will cut government spending more than it increases the debt limit, and advance the cause of the balanced budget amendment, without job-killing tax hikes,” Boehner said in a note to colleagues. “Those talks are moving in the right direction, but serious issues remain. And no agreement will be final until members have a chance to weigh in. I would expect a conference call for members later this afternoon.”

The closed-door bipartisan negotiations between the White House and Republican and Democratic leaders in Congress carried on even as senators voted down on a plan authored by Senate Majority Leader Harry Reid. That proposal failed in a 50-49 vote. A majority of senators, all Democrats, voted for Reid’s proposal, but it fell far short of the 60 votes needed to overcome procedural hurdles in the senate.

Two proposals to raise the debt ceiling –- one written by House Republicans and one by senate Democrats –- have fallen in the Senate this weekend.

But the failure of those partisan proposals seems to have kick-started the three sides –- Republican and Democratic lawmakers and the Obama administration -– to work together again.
After months of haggling and partisan posturing about a way to raise the debt ceiling -– the government’s credit limit -– while instituting spending cuts to mollify budget-conscious lawmakers, leaders in Washington were close to a deal Sunday afternoon.

The possible agreement would impose more than $1 trillion in government spending cuts immediately and create a new Congressional panel to recommend more institutional changes by the end of this year. That proposal would be guaranteed a vote in Congress or else steeper spending cuts would be triggered. The proposal, which is not yet final, would also raise the nation’s debt ceiling $2.8 trillion –- enough to last through 2012 — ahead of a Tuesday default.

Sources tell ABC News that the major potential roadblock — the triggers — are now essentially agreed upon: If the new special deficit reduction committee fails to come up with $1.5 trillion in deficit reductions that passes Congress, spending cuts that hit the Pentagon budget most deeply, as well as Medicare providers (not beneficiaries) and other programs would immediately be triggered.

If the super-committee comes up with some deficit reduction but not $1.5 trillion, the triggers would make up the difference.

So it’s a minimum $2.7 trillion deficit reduction deal. The debt ceiling would be raised by $2.4 trillion in two installments — $900 billion immediately and $1.5 trillion next year with Congress voting its disapproval or the passage of a Balanced Budget Amendment.

All sides hope this will be enough to convince the markets and ratings agencies that the federal government is serious about deficit reduction –- in order to avoid default.

Both sides will declare victory. Last week the biggest difference between the Boehner and Reid proposals was whether, as the GOP demanded, there would be another debt ceiling vote before the election. That won’t happen in this deal.

But Republicans got almost every single other item that they pushed for in this process.

It remains to be seen how House Republicans, who have bucked even Speaker Boehner in the past week, will react to this plan. In order to pass, it will need bipartisan support in both houses of Congress.

With reporting from ABC News’ Jonathan Karl (@jonkarl) and Jake Tapper (@jaketapper)

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