Rival Democratic and Republican plans to raise the government's borrowing ability have thrust Congress into a standoff just one week away from a potentially devastating debt crisis. President Barack Obama made a last ditch call for compromise, but House Speaker John Boehner said negotiations with the White House had been futile.
"We can't allow the American people to become collateral damage to Washington's political warfare," Obama declared Monday in a prime-time address to the nation.
Boehner, in a nationally televised rebuttal, said he had given "my all" to work out a deal with Obama."The president would not take yes for an answer," he said.
The extraordinary back-to-back appeals to the public gave no indication that weeks of brinkmanship and sputtering talks over long-term deficit reductions were on the verge of ending. With an Aug. 2 deadline rapidly closing, Congress and the White House had limited options to avoid a potential government default that could send the already weak economy into a damaging swoon.
Both Democrats and Republicans softened previous hardline positions and appeared ready to leave quarrels over entitlement programs and higher tax revenues for later. But continued bickering on Capitol Hill overshadowed any signs of emerging common ground.
Obama reiterated his call for achieving lower deficits though spending cuts and new tax revenues. But in a notable retreat, he voiced support for a Senate Democratic plan that would reduce deficits by about $2.7 trillion over 10 years only with spending cuts, not with additional revenue.
The Senate plan, unveiled Monday by Senate Majority Leader Harry Reid, D-Nev., and the proposal announced the same day by Boehner overlap in significant ways. Both identify about $1.2 trillion in spending cuts to the day-to-day operating budgets of government agencies, though Reid's proposal also counts an extra $1 trillion in savings from winding down wars in Iraq and Afghanistan. Both proposals would create a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid.
The primary difference between the two is timing. Reid's proposal would raise the debt ceiling enough so that it wouldn't have to be reconsidered until 2013, beyond the 2012 elections, as demanded by Obama. The GOP plan would only extend the debt ceiling for about six months.
For Republicans, the timing provides crucial leverage to force Democrats and the president to cut spending in Medicare, Medicaid and Social Security, expensive benefit programs that Democrats have long protected, despite escalating costs.
Obama has said he would not sign a short-term extension of the debt ceiling, but on Monday he stopped short of issuing a veto threat. Still, he said, a six-month-long increase in the debt ceiling would allow Republicans to try to force their will once again, demanding "harsh cuts" in program like Medicare and refusing to allow tax increases on the wealthy.
"Based on what we've seen these past few weeks, we know what to expect six months from now," he said. "Once again, the economy will be held captive unless they get their way."
Credit rating agencies such as Moody's and Standard & Poor's have threatened to downgrade the United States' gold-plated AAA rating if Congress and the White House don't extend the debt ceiling and take steps to bring long-term deficits under control.More.