President Obama will use the bully pulpit in prime time tonight and House Speaker John Boehner will give Republicans side immediately after as the two take their party’s separate cases to the American people in a high stakes and last-minute fight over the debt ceiling.
The President will address the nation live at 9 pm from the East Room (watch on ABC News stations or streaming live right her on ABCNews.com). Boehner’s remarks will immediately follow.
The news comes amid an impasse in Washington over how to raise the nation’s credit limit and avoid an Aug. 2nd default. It would be the first default in U.S. government history.
Bipartisan talks broke down over the weekend and now Democrats and Republicans are pursuing divergent proposals on Capitol Hill.
Republicans are rallying around a proposal written by House Speaker John Boehner that would raise the debt ceiling, but only by about a $1 trillion. President Obama has said he would veto such a plan. The debate has been difficult and all-consuming for Washington and there is concern that having it again in one year could hurt the economy. It would also instantly become a top issue in the presidential campaign. Democrats have insisted that any debt ceiling increase last until 2013.
Boehner’s framework would cut and cap discretionary spending to generate $1.2 trillion savings over 10 years and increase the debt limit by less than $1 trillion. The plan would also create a joint committee on deficit reduction to come up with a second wave of deficit reduction by the end of this year.
Following a meeting this afternoon with the House Republican Conference, Boehner told reporters that he discussed a two-step approach to cutting spending – with discretionary spending caps now, and also the formation of a bipartisan, bicameral special committee with a mandate to identify additional deficit reductions by the end of the year.
“This legislation reflects a bipartisan negotiation over the weekend with our colleagues in the Senate and as a result of this bipartisan negotiation, I would call this plan less than perfect, but it does ensure that the spending cuts will be greater than the hike in the debt limit and secondly there are no tax increases that are part of this plan.”
Boehner said the legislation would also require the House and Senate to each have a vote on a balanced budget amendment after October 1 and before a second package of deficit reduction is brought to the floor – allowing for enough time for support to materialize around a balanced budget amendment.
“Time’s running short,” Boehner warned. “I’m urging my House colleagues to support it and I’m urging my Senate colleagues to support it as well, and I think it would be irresponsible for the president to veto such legislation, because it is a commonsense plan and would help us avoid default.”
Earlier today the White House made clear it will support the plan written by Democrat and Senate Majority Leader Harry Reid. His proposal to cut more than $2 trillion in spending, including money saved through the planned drawdown of the wars in Iraq and Afghanistan – a move Republicans dismiss as not really cutting spending – although those savings are also featured in a GOP Budget draft that passed the House earlier this year.
Neither of the plans have what bipartisan negotiators had hoped for until last week – guarantees of reform for Medicare and Social Security and the byzantine tax code. Boehner walked away from talks for a “grand bargain” Friday and essentially shut the door on President Obama’s hope to use the debt ceiling to impose sweeping reforms of both how the government collects money from citizens and the snowballing cost of America’s social safety net.
Boehner left the bipartisan talks because he said President Obama wanted to raise taxes. President Obama maintained that any long-term change should be balanced between spending cuts and tax hikes to make sure Americans don’t lose too many government services.
Those failed negotiations to use the debt ceiling for bigger change clearly left the parties frustrated with each other. White House spokesman Jay Carney accused House Republicans of walking away from deficit negotiations “after insisting that the budget be balanced on the backs of seniors and the middle class.”
Democrats have moved toward Reid’s plan even though it does not guarantee any of the sweeping entitlement and tax reform that the President long advocated.
And Liberals are wary of the plan.
“While we applaud Majority Leader Reid for his commitment to protecting Social Security, Medicare and Medicaid–and his opposition to a short-term deal that could drive up mortgage and interest rates for the middle class–we strongly urge him and all Democrats to insist on a balanced approach that ends outrageous tax breaks and loopholes for big corporations and the rich. Unfortunately, this plan doesn't do that,” said Moveon.org Executive Director Justin Ruben in a statement.
Democratic Rep. Karen Bass, D-Calif., noted on ABC’s Top Line program that the Senate plan, which includes just spending cuts but no increase in tax revenues, is “going to be very, very hard for Democrats in the House,” to support.
Carney called it “a responsible compromise that cuts spending in a way that protects critical investments and does not harm the economic recovery.”
He was more blunt on Twitter, when he messaged followers: ““House GOP risks our economy by refusing to compromise. #Speaker walked away twice from fair deals backed by the public. THAT’S indefensible.”
And President Obama spoke to the National Council of La Raza earlier today saying “we can’t just close our deficits by cutting spending. … Not only is it not fair if all of this is done on the backs of middle-class families and poor families, it doesn’t make sense. It may sound good to save a lot of money over the next five years, but not if we sacrifice our future for the next fifty.”
Meanwhile Republican Speaker of the House John Boehner met with his party today to outline his own proposal for a two-step deficit reduction plan.
Despite the ongoing drama in Washington and the persistent stalemate between Democrats and Republicans over what programs to cut and how to pay for the promises it has made, Markets seemed to shrug off Washington's failure today to arrive at a single plan for dealing with the U.S. debt ceiling.
As Republicans and Democrats continued to pursue separate solutions, the world's stock markets remained calm — if a bit depressed. Major exchanges all closed down slightly. The Dow was down by 0.7 percent, the S&P 500 by .56 percent.
Only gold and the Swiss franc strengthened. Gold closed up 0.86 percent. Futures for the precious metal earlier in the day hit a record of $1,624.30 an ounce. The Swiss franc gained against the dollar.
U.S. Treasuries showed surprising resiliency, with the yield on 10-year Treasuries rising to 3 percent. Some observers took that as a sign that fears of financial catastrophe had been exaggerated. Guy Lebas, a fixed income strategist at Janney Montgomery Scott in Philadelphia, told Bloomberg he'd expect to see a bigger move if something "truly catastrophic" was on the horizon.
ABC News' Jonathan Karl, Jake Tapper, John Parkinson, Sunlen Miller, Sara Just, and Z. Byron Wolf contributed to this report.