No significant progress was made as the president and congressional leaders resumed their meeting at the White House Tuesday to resolve the debt-ceiling impasse before the August 2 deadline.
The meeting – the third in three days – lasted for nearly two hours and another meeting was expected Wednesday, Reuters reported.
While both parties remained deadlocked on increasing tax rates and spending cuts, President Obama issued a veiled threat that if no compromise was reached the elderly would be the first to be hit by a debt default.
In an interview to CBS News, the president said their checks could be stalled.
“I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue,” Obama said in the interview recorded before the Tuesday meeting. “There may simply not be the money in the coffers to do it,” he added.
Meanwhile, in a surprising move, Senate Minority Leader Mitch McConnell (R-Ky.) outlined a “backup” plan that would allow the president to raise the debt limit in three separate installments over the next year, as long as he proposed greater spending cuts to go along with that.
“Republicans will choose a path that actually reflects the will of the people, which is to do the responsible thing and ensure the government doesn’t default on its obligations,” McConnell said in a speech on the Senate floor.
The complicated maneuver would work like this: Later this year President Obama would submit a request to raise the debt ceiling by $700 billion. The request to Congress would be accompanied by a list of spending cuts more than that amount.
Congress then would adopt a resolution of disapproval – not approval – over the increased borrowing. It would only take a simple majority to pass and if it is indeed passed and the increased borrowing is not allowed, the president could veto it. The House and the Senate then can vote and theoretically override the veto. That, however, is not possible because congressional Democrats would not let it happen.
The president would then make similar requests for two $900-billion increases, one in the fall of this year and the second in the summer of 2012, followed by the same legislative process.
According to the “McConnell Plan,” a total of $2.5 trillion would be raised with a spending cut of more than $2.5 trillion.
This proposal is being seen as an attempt by the Republican Party to wash its hands of the difficult vote to increase the debt limit. It strengthens Obama’s hands to raise the debt ceiling with the support of only Democratic congressmen and avoids a default. It would also absolve Republican lawmakers of the responsibility if default did occur.
According to a Washington Post columnist: “At bottom, McConnell’s proposal is the latest GOP line on the debt ceiling – it’s Obama’s problem, not ours – taken to its logical and legislative conclusion.”
McConnell’s proposal has drawn criticism from other congressmen, Democrats as well as Republicans. Rep. John Larson (D-Ct.) criticized McConnell for laying preconditions to voting for a raise in the debt ceiling. Republican presidential candidate Newt Gingrich came down on his colleague, saying McConnell displayed an “irresponsible surrender” to big government.
Meanwhile Michael Steel, spokesman for House Speaker John Boehner, said in an e-mail that the Republican leader is aware of McConnell’s plan, though it wasn’t clear if Boehner supported the plan.
“The Speaker shares the Leader’s frustration,” Steel wrote. “Republicans are unified in our commitment to ensuring that the debt limit is not used as leverage to saddle small businesses with increased taxes that destroy jobs.”
The Democratic leaders, however, are not averse to considering McConnell’s proposal.
While the Senate Majority Leader Harry Reid (D-Nev.) is reported to have said that he was “not going to trash” McConnell’s plan and would give it a close look. Democratic Sen. Dick Durbin of Illinois told CNN that the Republican plan was being discussed “as one of the options.”
President Obama has said he will continue to talk to congressional leaders every day until a deficit and debt agreement is reached.
The United States government is currently over $14.4 trillion in debt. Lawmakers must reach a deal to raise the borrowing capacity before August 2 if the nation is to avoid defaulting on bills.