House GOP Leaders Fail to Secure a Vote on Debt Limit

Republicans in the House of Representatives failed for a second straight day Thursday to find enough votes within their own ranks to pass a heavily lobbied GOP leadership plan to cut future deficits and raise the nation's debt limit.

The sudden delay threw the GOP strategy into uncertainty and made it unclear how Republicans will proceed as lawmakers struggle to find a way to raise the nation's $14.3 trillion debt limit. Unless it's raised by Tuesday, financial markets could panic and the economy could be sent reeling.

The GOP plan, which would cut about $1 trillion from spending over 10 years and raise the debt limit in two stages, seemed to be on a smooth path in the House, where Republicans have a 240-193 majority. GOP leaders badly wanted the bill to win, figuring it would be a show of strength and unity heading into last-ditch negotiations.

Instead, after a day of debate, House leaders abruptly postponed an early evening vote. They then met privately for nearly five hours, applying intense pressure to rebellious conservatives who wanted more than the nearly $1 trillion in cuts the bill offered — and in some cases wanted no debt limit increase — and finally said there would be no vote at all Thursday.

As late as 9 p.m., Republican aides were assuring everyone there would be a vote and the bill would pass. But an hour and 25 minutes later, Majority Whip Kevin McCarthy, R-Calif., told reporters there would be no vote Thursday. An anticipated Wednesday vote was also postponed, while House leaders added more cuts.

But that still wasn't enough for many GOP conservatives, under strong pressure from tea party and other like-minded groups. Among those holding out were five Republican members of the South Carolina delegation.

Rep. Tim Scott, R-S.C., was demanding that the House at least vote on a constitutional amendment requiring a balanced federal budget as the most reliable way to place a structural brake on spending.

“I represent single parents and folks who work 12 hours a day,” Scott said an hour later. “They want an American dream that still matters. I want a balanced budget amendment.”

There were reports that House Speaker John Boehner and others leaders were negotiating with the doubters, but it was unclear what was being offered. Other reports said the GOP leaders were as close as two votes from getting the 217 needed for passage.

It was unclear if the bill will be considered Friday. A defeat would be a huge embarrassment for Boehner. “This is a vote that John needs,” said Rep. Peter King, R-N.Y.

Even if Boehner prevailed, the GOP bill was expected to have a short life. The Democratic-dominated Senate was poised to kill the measure, possibly Thursday night. Even if it somehow won Senate passage, the White House vowed to veto it, and attention then would turn to last-ditch talks between the White House and congressional leaders on a final compromise plan.

“Our view is that we will be at stalemate after tonight,” said White House senior adviser David Plouffe, adding that the administration hopes for a breakthrough “perhaps over the weekend.”

The House GOP plan and a rival one proposed by Senate Democrats are largely similar on deficit reduction. Each would cut virtually the same amount from discretionary spending, contains no tax increases and sets up special legislative committees to propose further savings. The White House says the major issue to be resolved centers on what mechanism would trigger further deficit reduction.

The stumbling block at the heart of the deadlock, though, remains the length of any new debt limit increase. Boehner, R-Ohio, wants a two-stage process, with a limited $900 billion increase in Treasury borrowing authority, then another vote later this year or early next. Democrats want only one vote to extend Treasury borrowing authority by $2.7 trillion through 2012, to avoid repeating this market-rattling showdown during a politically tense election season.

Lawmakers continued private talks Thursday in search of a deal as pleas from Americans for some resolution grew more urgent.

“Failure to increase the statutory debt limit in a timely fashion could have significant and long-lasting negative impact on the U.S. economy,” warned 115 business associations, including the U.S. Chamber of Commerce, in a letter to members of Congress. A default, they said, would “result in immediately higher interest rates, a likely decline in the dollar, a drop in the stock markets, potentially higher oil prices and a loss of economic growth and jobs.”

It was unclear how close negotiators were to a final deal, though leaders agreed something must be done.

“With the fragile economy that we have, the last thing we need to do is be playing around with August the 2nd and the unknown,” Boehner said.

But neither side signaled any movement. Publicly, each side accused the other of playing political games.

“Democratic leaders and the president himself have endorsed every feature of this legislation except one: and that's the fact that it doesn't allow the president to avoid another national debate about spending and debt until after the next presidential election,” said Senate Republican leader Mitch McConnell of Kentucky. “This assurance is the only thing the president and Senate Democrats are holding out for right now.”

Senate Democrats insisted that the House debate was a waste of time.

“It's not going to pass this house, because a short-term extension risks the same things that no extension does, a downgrade, a lack of confidence in the markets, and gridlock,” said Sen. Charles Schumer, D-N.Y.

Among the key elements of the House GOP plan, and the rival Senate Democratic plan, are:

_ Debt limit. Boehner would have Congress raise the limit in two stages, first by $900 billion, which should last into early next year, then another amount. Democrats want one vote that would raise the limit by $2.7 trillion through 2012.

_ Total savings. Boehner, $917 billion in deficit reduction over 10 years, with hopes for another $1.6 trillion later; Democrats, $2.2 trillion.

_ Discretionary spending. Both cut roughly $750 billion over 10 years.

_ War spending. Democrats assume $1 trillion in savings over the decade from the winding down of wars in Iraq and Afghanistan. Republicans don't include that, arguing the money would be saved anyway _even though they included those savings in the budget they adopted earlier this year.

_ Interest. Boehner's plan would save about $156 billion in interest over 10 years; Democrats, $375 billion.

_ Taxes. No new revenues in either plan.

_ Further cuts. Both plans would set up 12-member joint congressional committees to recommend further cuts in spending. Boehner's group would have a goal of cutting $1.8 trillion over 10 years; Democrats offer no specific target but would set a goal of reducing annual deficits to below 3 percent of gross domestic product.

(James Rosen, Steven Thomma, Lesley Clark and David Goldstein of the Washington Bureau contributed.)

© 2011 McClatchy-Tribune Information Services

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