- The Washington Times - Monday, July 25, 2011

Some common ground emerged Monday in talks to raise the government’s borrowing limit, with both Republicans and Democrats now focused on immediate spending cuts and a future committee to recommend bigger reductions — though they still disagree on how big the debt increase should be.

House Republicans proposed $1.2 trillion in spending cuts, coupled with a debt increase of about $1 trillion, which would carry the government into next year. Senate Democrats, meanwhile, want a debt increase of $2.7 trillion, to last past the next election, and are offering $1.3 trillion in new spending cuts over the next decade.

“Republicans’ short-term plan is a nonstarter in the Senate and in the White House,” said Senate Majority Leader Harry Reid, Nevada Democrat. “It appears to me at this stage that the Republicans are more interested in trying to embarrass the president than doing what’s right for the country.”

Senate Democratic leaders challenged Republicans to accept their plan, saying it includes two of their biggest demands: no tax increases and spending cuts equal to the amount the debt limit it raised.

Republicans countered that Democrats were focusing too heavily on a political deadline of next year’s election, rather than on the details of government spending.

“The president continues to pick politics over people,” said House Majority Whip Kevin McCarthy, California Republican. “His only concern when you listen to him is he brings up the election. We’re more concerned about the policies and where this country is going.”

Both sides are racing against an Aug. 2 deadline, which is when the Treasury Department says the government will bump up against the $14.29 trillion debt limit. If the ceiling isn’t raised by then, the Obama administration says it would have to default on some obligations.

House leaders said they were aiming to hold a vote on their plan on Wednesday. The Senate’s schedule was still unclear Monday evening.

The Senate plan won the support of President Obama on Monday afternoon, despite its lack of tax increases — something he had said just hours before was necessary for any deal.

“Faced with the ‘my way or the highway,’ short-term approach of the House Republicans, Senator Reid has put forward a responsible compromise that cuts spending in a way that protects critical investments and does not harm the economic recovery,” White House press secretary Jay Carney said in a statement.

Mr. Obama scheduled a last-minute prime-time televised speech for Monday night to take his case directly to voters. The speech was delivered too late for this edition.

But Republicans have accused Mr. Obama of being the impediment to a deal.

House Speaker John A. Boehner on Friday walked away from talks with the White House and said he would negotiate directly with Mr. Reid. The GOP said those new talks spawned an agreement over the weekend, but when Mr. Reid presented the plan to the White House, Mr. Obama balked.

That sent both sides back to produce individual plans, though they appear to be working off of the same stem: both call for $1.2 trillion in lower discretionary spending, neither includes tax increases, both call for a committee to work out future deficit reduction, and both agree that debt increases should be matched dollar-for-dollar with spending reductions.

Mr. Reid’s plan also calls for $100 billion less in automatic spending such as agriculture subsidies, which are determined by formula, and he counts $1 trillion in lower spending because the wars in Afghanistan and Iraq are being wound down and another $400 billion in lower interest payments, thanks to those reductions. Those total $2.7 trillion, which he said is how much the debt can be raised.

Republicans, though, said it is disingenuous to claim the $1 trillion for ending the wars, because those savings were going to happen anyway.

“The plan is full of gimmicks,” Mr. Boehner, an Ohio Republican, said. “It doesn’t deal with the biggest drivers of our deficit and our debt, and that would be entitlement programs.”

The House GOP plan would set discretionary spending caps that would force cuts of $1.2 trillion, coupled with a debt increase of about $1 trillion, which would last through February or March. It also would establish a special joint congressional committee charged with recommending an additional $1.8 trillion in deficit reduction, due by Thanksgiving, which would then allow the president to request another debt increase.

Democratic opposition to the speaker’s proposal largely rests with its aim to increase the debt limit over two stages, a scenario they say would do little to placate already jittery financial markets.

They said their own plan meets the GOP’s stated concerns.

“All in all, this is an offer that Republicans can’t refuse,” said Sen. Charles E. Schumer, New York Democrat. “We have moved in their direction so many different times, and they don’t budge.”

It’s unclear whether either plan can pass either chamber right now, and those on both ends of the political spectrum were dissatisfied.

Rep. Jim Jordan of Ohio, chairman of the conservative House Republican Study Committee, said he fears the House GOP plan wouldn’t cut spending enough to satisfy credit-rating agencies, which have threatened to downgrade the federal government’s AAA rating.

“While I thank the speaker for fighting for Republican principles, I cannot support the (GOP) plan that was presented to House Republicans,” Mr. Jordan said.

Liberal activists, meanwhile, said Democrats were caving by not demanding tax increases be part of the bill Mr. Reid will bring to the Senate floor.

“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 Justin Ruben, executive director of MoveOn.org.

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