WASHINGTON — The U.S. Senate’s Republican leader offered a backup plan to avert a potentially calamitous U.S. government default, as budget talks between President Barack Obama and his opposition rivals ground to a standstill.
Lawmakers return to the White House for another negotiating session Wednesday, a day after Senate Minority leader Mitch McConnell launched a long-shot proposal which in effect, guarantees Obama’s requests for new government borrowing authority unless Congress musters veto-proof two-thirds majorities to deny him.
The plan was hatched out of frustration that over the deadlock as the clock ticks toward an Aug. 2 deadline for a default on U.S. obligations — something that has the potential to spark a global financial crisis.
McConnell defended his “last resort” plan against conservative critics, saying it was the best way to protect Republicans from being associated with economic hard times.
“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 as he begins campaiging for re-election in 2012.
Republicans are demanding $2 trillion-plus in budget cuts as the price for raising the government’s $14.3 trillion debt limit.
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 Republican refusals to raise revenues as a way of reducing the debt, have led Democrats to withhold further spending cuts beyond a handful tentatively agreed to during talks led by Vice-President Joe Biden.
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.
McConnell’s plan, however, met stiff opposition from small government, anti-tax tea party conservatives and seemed unlikely to pass the House of Representatives, but neither the White House nor House Speaker John Boehner dismissed it out of hand.
Under McConnell’s proposal, Obama could request — and likely secure — increases of up to $2.5 trillion in the government’s borrowing authority in three separate installments over the coming year as long as he simultaneously proposed spending cuts of greater size.
The debt limit increases would take effect unless blocked by Congress under 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.
Democratic officials said Obama did not reject McConnell’s idea. A statement issued later by press secretary Jay Carney said the president “continues to believe that our focus must remain on seizing this unique opportunity to come to agreement on significant, balanced deficit reduction.”
Obama himself upped the stakes Tuesday, telling CBS News that more than $20 billion in government pension checks could be held up if the debt ceiling is not raised by Aug. 2.
Congress could raise the debt limit without making any cuts as it has done frequently in the past regardless of which party was in control. But this time, the Republican-controlled House, which includes dozens of new lawmakers supported by the anti-tax tea party movement, is insisting on major spending cuts to bring down the huge federal deficit as a condition for raising the debt limit.