The Corner

Another Breakdown?

Senate Majority Leader Harry Reid (D., Nev.) has released a statement slamming Republican “intransigence” for “pushing us to the brink of default.” He says he is “deeply disappointed in the status of negotiations with my Republican colleagues” — which began today at the White House and continued in House Speaker John Boehner’s (R., Ohio) office this afternoon — to find a way forward on raising the debt ceiling. Upon leaving the Capitol this evening, Reid allegedly told reporters to “talk to Republicans…We did our best.”

Earlier in the day there appeared to be progress toward a deal. In a conference call with House Republicans, Boehner said he hoped to unveil a final plan by Sunday afternoon before financial markets open in Asia in order to avoid a potential panic. Sources familiar with the call confirm that the speaker discussed a “two-tiered” plan that would raise the debt ceiling and achieve “savings” of between $3 trillion and $4 trillion. The plan would likely involve a short-term debt increase paired with spending cuts that exceed the amount of the increase, and would establish a framework for additional cuts and savings, whether by establishing a special commission (as outline in the McConnell-Reid plan) or issuing guidance to congressional committees to come up a set level of savings by a target date.

Following the meeting in Boehner’s office, House Minority Leader Nancy Pelosi (D., Calif.) confirmed that a two-tiered approach was under discussion, and suggested that revenues would be included in the second tier.

Reid says he won’t support a two-tiered option, which is understandable given that he has 20-plus Senate Democrats facing reelection next year who would presumably wish to avoid multiple votes to raise the debt ceiling, not to mention President Obama’s insistence that any increase get him through the to 2013. But Reid’s statement has Chuck Schumer (D., N.Y.) written all over it. Back in April, Schumer was doing everything he could to force a government shutdown, believing it would play to Democrats’ political advantage. And several GOP sources speculate that he was behind the leaked report of a “grand bargain” between Boehner and the White House, in an effort to scuttle the deal because it included some changes to entitlement programs (thus rending less effective the “Mediscare 2012″ campaign Democrats are gearing up for).

If the president’s press conference last night was not evidence enough, it’s becoming more and more clear now that Democrats may be actively be trying to spook financial markets in the hopes that Republicans will bear the brunt of the blame. And that is deeply disappointing, to say the least.

UPDATE: Byron York reports that House Republicans are moving forward on a two-tiered proposal to raise the debt ceiling:

House Republicans are finishing work on a new proposal to resolve the standoff over the debt ceiling.  The proposal, set to be finished Sunday, will be in two parts.  The first will combine a short-term increase in the debt ceiling with spending cuts.  The second will lay the groundwork for a longer-term increase in the debt ceiling coupled with far-reaching deficit reduction.

“Senator Reid said on Friday that he is going to wait for us to move,” says a well-informed GOP House aide.  “So we’ll move.”  Another well-informed aide confirmed the basic outline of what’s happening.

Staff of the House Rules Committee is involved in the work, which is an indication that the process is nearing completion.  Before any bill can be considered on the House floor, the Rules Committee must first pass a rule setting out the process for its consideration.  Once the proposal is finished, it would likely be posted on the Rules Committee website, probably no later than Monday, so the committee could meet to consider it on Tuesday and it could be on the House floor by Wednesday.

Work on the new proposal was underway before negotiations with the White House blew up on Friday.  Sources say the plan was being created last week, even as the House leadership devoted considerable time to passing the “Cut, Cap, and Balance” proposal.  Once the Senate Democratic leadership blocked “Cut, Cap, and Balance,” House leaders stepped up work on the new proposal.  Right now, the new direction is believed to be the only way forward.  “McConnell-Reid is just not a viable option in the House,” the aide says, referring to Senate Minority Leader Mitch McConnell’s complicated proposal to allow the president to increase the debt ceiling.

More here.

Earlier this month, President Obama dared House Republicans to “call his bluff” when it comes to his opposition to a short-term debt increase. Looks like that’s exactly what they plan to do.

UPDATE II: Senate Minority Leader Mitch McConnell’s office weighs in: “There is bipartisan agreement on the need to prevent a default, but given the unprecedented size of the debt ceiling increase the President is requesting, this is not an easy process.”

Andrew StilesAndrew Stiles is a political reporter for National Review Online. He previously worked at the Washington Free Beacon, and was an intern at The Hill newspaper. Stiles is a 2009 ...


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