Debt dispute boils: Capitol's hot, inside and out

Gridlock stubbornly held the high ground Friday in the steaming capital despite the threat of a government default in 11 days' time. Talks between President Barack Obama and House Speaker John B...

Gridlock stubbornly held the high ground Friday in the steaming capital despite the threat of a government default in 11 days' time. Talks between President Barack Obama and House Speaker John Boehner seemed stuck in limbo, and the Democratic-controlled Senate scuttled legislation drawn to conservatives' specifications.

As most lawmakers left the sweltering city for the weekend, there was vague talk but few details of backup plans in both houses of Congress to raise the nation's $14.3 trillion debt limit before the critical Aug. 2 deadline.

One option was to raise the debt ceiling by $1 trillion and cut spending by a little more than that, a short-term deal that would necessitate a second vote on the issue before the 2012 elections.

Boehner said he was "frankly not close to an agreement" with Obama in talks to cut deficits by up to $4 trillion and ease the government's ability to keep borrowing.

He spoke shortly before the Senate voted 51-46 along party lines to kill House-passed legislation. That bill would have cut spending by as much as $6 trillion over a decade and required Congress to send a constitutional amendment to balance the budget to the states for ratification — conservatives' price for raising the debt limit.

Sen. Mitch McConnell of Kentucky, the Republican leader, accused Obama of "a total abdication of leadership" on the nation's debt, and said the legislation was a step toward "getting our house in order."

But Senate Majority Leader Harry Reid, D-Nev., attacked the bill as a "radical plan to kill Medicare and Social Security," and said House Republicans needed to know it was dead.

"It's interfering with the negotiations between the White House and the House of Representatives, and it is without merit," he added.

Across the Capitol, Boehner rebutted.

"The House has acted. We've done our job," he said. "The Democrats who run Washington have done nothing. ... Where is their plan?"

Other Republicans said his remarks reflected the views expressed inside a closed-door meeting of the rank and file. "Our conference was loud. 'Stand firm,'" said Rep. Jim Jordan, R-Ohio, a leading conservative.

But Obama, seemingly more optimistic about compromise in remarks at the University of Maryland, said House Republicans who held to such views were "the only people we have left to convince" to swing behind a balanced plan that includes higher federal revenue as well as spending cuts.

The day's events underscored the straddle Boehner must perform by siding with his tea party-backed conservatives at the same time he talks compromise with the Democratic president.

Despite the harsh rhetoric on the Senate floor, aides in both parties said rejection there of the House-passed bill was a necessary step toward building support for a backup plan to avoid default in case the negotiations between the president and House GOP leaders failed.

Nor was Boehner the only leader in a tight spot.

Bipartisan negotiations stalled, at least temporarily, following a revolt on Thursday by Democrats who feared the president would agree to deep cuts in Medicare and Social Security without gaining a commitment for additional revenue.

The president met privately late Thursday with top Democratic lawmakers, and nearly 24 hours later, no additional negotiations had been announced. It was not known whether the White House and GOP officials had been in contact by phone or email.

Republicans said Obama had begun backing away from earlier commitments on spending cuts to Medicare, in particular.

Cuts in Medicare, Social Security and other benefit programs and increases in some taxes have always been the principal stumbling blocks to a deal to rein in federal deficits and clear the way for Republicans to vote for raising the debt limit.

Republican and Democratic officials said the two sides had been unable to bridge their differences over provisions to take effect if tax-overhaul legislation failed to materialize, and thus the higher revenue envisioned in an agreement.

In effect, the two sides were discussing what legislative hostages to hold. Democrats wanted the expiration of Bush-era tax cuts for the wealthy, while Republicans sought the repeal of key elements of the year-old health care legislation, according to officials who spoke on condition of anonymity, citing the private nature of negotiations.

In the absence of a deal, Reid and McConnell are collaborating on a backup plan to allow Obama to raise the debt limit by $2.4 trillion in three installments without prior approval by Congress.

That same plan would establish a committee of lawmakers to recommend cuts, with the House and Senate required to vote on any recommendations without possibility of changes.

Also under discussion was the possibility of inserting specific cuts into the legislation itself, and Reid and McConnell met privately during the day with the authors of a separate bipartisan plan released earlier in the week to chop deficits of roughly $3.7 trillion over a decade. Sen. Kent Conrad, D-N.D., one of the "Gang of Six" who prepared that separate proposal, said, "We talked about different ideas for how our work might be included."

Reid said he was deferring debate on a fallback plan until next week because of changed circumstances.

"The path to avert default now runs first to the House of Representatives," he said, countering Boehner's challenge for Democrats to produce a plan of their own to cut spending and raise the debt limit.

Reid's decision to give senators a weekend off was in itself a reversal.

Earlier in the week, he had announced the Senate would meet every day, including weekends, "until Congress passes legislation that prevents the United States from defaulting on our obligations."

Also on Friday, Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and New York Fed President William Dudley met "to discuss the implications for the U.S. economy if Congress fails to act," according to a statement, which added that they "remain confident that Congress will raise the debt ceiling soon."

Separately, former Treasury Secretary Henry Paulson, who served under President George W. Bush, said after breakfasting with Geithner, "Failing to raise the debt ceiling would do irreparable harm to our credit standing, would undermine our ability to lead on global economic issues and would damage our economy."


Associated Press writers Andrew Taylor, Alan Fram, Donna Cassata and Ben Feller contributed to this story

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