GOP leaders say the nation can't afford to default

Hope dimming for a broad debt-limit deal, Congress and the White House scrambled Wednesday to salvage deficit-reduction talks while top congressional Republicans said the nation cannot afford to...

Hope dimming for a broad debt-limit deal, Congress and the White House scrambled Wednesday to salvage deficit-reduction talks while top congressional Republicans said the nation cannot afford to default on its obligations — for economic reasons and their party's own good.

Ahead of a fourth negotiating session at the White House in as many days, Senate Republican leader Mitch McConnell defended his proposal to give President Barack Obama new powers to increase the nation's borrowing limit without GOP support.

"I refuse to help Barack Obama get re-elected by marching Republicans into a position where we have co-ownership of a bad economy," McConnell said on a radio talk show, contending that letting the nation go into financial default would give Obama reason to blame Republicans for the negative fallout.

House Speaker John Boehner added his own warning against default, even as he expressed frustration with the White House over its role in negotiations to trim long-term federal deficits.

"Nobody wants to go there, because nobody knows what's going to happen," he said of a potential financial default. "It's a crapshoot."

In comments to a small group of reporters, Boehner said he has not been able to get commitments from the president and his White House team about cutting big entitlement programs. He said that "dealing with them the last couple months has been like dealing with Jell-O."

McConnell's and Boehner's remarks came amid a flurry of debt-related developments Wednesday that reflected the rising urgency of an Aug. 2 deadline to increase the government's borrowing authority or fall into a first-ever default.

Federal Reserve Chairman Ben Bernanke warned lawmakers that their failure to raise the nation's borrowing limit could trigger a major financial crisis. He said that if the government defaults on its debt, it would throw "shock waves through the entire financial system."

Adding pressure, the Treasury Department said Wednesday the federal budget deficit was on pace to break the $1 trillion mark for a third straight year. The deficit totaled $971 billion for the first nine months of the budget year. With three months to go, this year's deficit will probably top last year's $1.29 trillion, according to the Congressional Budget Office.

In one hopeful sign for compromise seekers, Republican Sen. Tom Coburn said he might rejoin the so-called Gang of Six, the bipartisan group of senators who have been working for months to reach a bipartisan agreement on a big deficit-cutting deal that would blend spending cuts with a tax code overhaul.

And several lawmakers initiated steps that they said were designed to ease the impact of a default.

McConnell's proposal stood as the most ambitious effort to address the debt limit if negotiations between the White House and congressional leaders fail.

The plan would, in effect, guarantee Obama requests for new government borrowing authority unless Congress mustered veto-proof majorities to deny him. The plan would permit Obama to secure increases in the debt ceiling — needed for the government to pay its debts — and would let Republicans avoid politically damaging votes.

While McConnell appeared to accept the dire consequences of a government default, a group of conservative lawmakers discounted their own leaders' fears that defaulting on the nation's debt would be disastrous.

GOP presidential hopeful Michele Bachmann was one of three House members Wednesday who disputed Obama's assertion that a default would mean that Social Security recipients might not receive their checks after Aug. 2. The Social Security Trust Fund is financed by government securities — the ones that the government would not be able to guarantee in a default.

A two-hour negotiating session Tuesday produced no progress after a day of poisonous exchanges between Democrats and Republicans.

Explaining his plan, McConnell said on the Senate floor Wednesday that it would "make the president show in black and white the specific cuts he claims to support. If he refuses he'll have to raise the debt ceiling on his own."

"But he's not going to get Republicans to go along with that."

In an interview with radio talk show hostess Laura Ingraham, McConnell also said: "When we cannot force a result, we need to do the next best thing, and that is to clarify the differences between the parties."

McConnell's proposal immediately ran into stiff opposition among tea party conservatives and seemed unlikely to pass the House, but neither the White House nor House Speaker John Boehner, R-Ohio, dismissed it out of hand.

Obama has said he does not want to address the debt ceiling incrementally. But on Wednesday, White House spokesman Jay Carney merely said McConnell's idea was "not the preferred option."

"It is a form of kicking the can down the road," he said. "It is, however, an important acknowledgement that regardless of where we get in our negotiations over deficit reduction, we absolutely have to make sure that the United States continues to pay its bills and fulfill its obligations."

Under the McConnell proposal, the debt limit increases would take effect unless blocked by Congress through special rules that would require speedy action — and even then Obama could exercise his authority to veto such legislation. But the president's spending would have no guarantee of receiving a vote.

Sen. Jim DeMint, R-S.C., a lawmaker supported by tea party activists, was asked about McConnell's plan Wednesday on CBS' "The Early Show." He said, "Republicans weren't elected last November to make it easier to spend and borrow and add to our debt."

GOP presidential candidate Newt Gingrich wrote on Twitter, "McConnell's plan is an irresponsible surrender to big government, big deficits and continued overspending."

In the radio interview, McConnell fought back.

"The reason default is no better idea today than it was when Newt Gingrich tried it in 1995 is that it destroys your brand and would give the president an opportunity to blame Republicans for a bad economy," McConnell said.

Republicans, meanwhile, continued pushing for a balanced-budget constitutional amendment that would require Washington to balance its books. McConnell said politicians in Washington have showed they can't get the job done, and "if the president won't do something about the debt we'll go around him and take it to the American people."

Carney on Wednesday said Obama believes that there's no need to amend the Constitution in order to cut the deficit. He says it is a way of ducking responsibilities rather than facing problems.

Republicans are demanding $2 trillion-plus in budget cuts as the price for an increase in the government's ability to continue to borrow more than 40 cents of every dollar it spends. Both Republicans and Obama see the politically toxic debt limit vote as a way to seize an opportunity to cut future deficits — a move that would seem to be to the political benefit of both sides.

But GOP refusals to consider devoting any new revenue from closing tax loopholes — like those enjoyed by oil and gas companies — to cutting the deficit has led Democrats to withhold further spending cuts beyond a handful tentatively agreed to during several weeks of talks led by Vice President Joe Biden in May and June. For their part, Republicans say the White House is offering minuscule spending cuts in the near term and is pulling back from some tentative agreements on topics like requiring federal workers to contribute more to their pensions.

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