Debt Debate: What are the Odds Congress Can Raise Debt Ceiling by Aug. 2?

Jul 25, 2011 12:22pm

ap reid boehner sc 110725 wb Debt Debate: What are the Odds Congress Can Raise Debt Ceiling by Aug. 2?

ABC News’ Jonathan Karl (@jonkarl) reports: 

Democrats and Republicans are on a collision course this week over raising the debt ceiling.  At some point, somebody will need to back down, but right now both sides seem determined to have a fight that puts resolution by the August 2nd deadline in serious jeopardy.

Here’s how things are playing out:

Democrats

At 2:30 Monday, Senate Majority Leader Harry Reid will unveil his plan – increase debt ceiling until 2013, cut spending by $2.7 trillion including gimmicks that make the number look bigger than it really is. The biggest of these is factoring in savings from drawing down troops abroad as a spending cut.  On Wednesday, there will be a key procedural vote in the U.S. Senate on this plan.  It will need 60 votes, which means it must have at least seven Republicans.   

If Reid’s plan passes, the final vote would likely come on Saturday (July 30).  Democrats would then attempt to pressure the House to take up the Reid bill, the decision will be up to House Speaker John Boehner.

Republicans

At 2pm Monday, Boehner presents his plan  - $1.2 trillion in spending cuts and an eight to ten month debt ceiling increase followed by more cuts and another vote next year – to the House Republican caucus.  Assuming he gets a positive reception, he will then introduce the bill, setting up a House vote on Wednesday – the same day the Senate votes on Reid’s plan.

If the Boehner plan passes, Republicans would then attempt to pressure the Senate to bring up the Boehner bill, but the decision will be up to Harry Reid.

Bottom Line

Somebody has to give in.  The two houses of Congress could move toward passage of divergent, opposing debt ceiling plans on the same day. Republicans are saying the Reid plan can’t pass in the House.  Democrats are saying the Boehner plan can’t pass in the Senate.  Both are insisting the other will be pressured to give in.

Interestingly or disappointingly, depending on perspective, both plans complete side-step the tough issues:  Neither plan would definitively move toward reforming entitlements like Social Security and Medicare and neither plan raises tax revenues.

Odds-making

While both Republicans and Democrats seem resolved to solve the problem of the debt ceiling, it is looking increasingly likely that it won’t/can’t happen by the Aug. 2 deadline.  There is actually a lot of common ground between the two plans, the both sides seem intent on a fight that will put resolution by next week in jeopardy.

The odds of this issue being still unresolved by August 2nd?  40 percent.

The odds of this issue be still unresolved by August 5?  5 percent.

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