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Senate GOP showing flexibility in debt fight

By Andrew Taylor

Associated Press

Published: Wednesday, July 20 2011 8:10 a.m. MDT

WASHINGTON — Senate Republicans are showing far more flexibility than their tea party-backed House colleagues as Washington policymakers seek to steer the government away from a first-ever default on its financial obligations.

As the House doubled down on a symbolic vote to condition any increase in the government's borrowing authority on congressional passage of a balanced budget constitutional amendment and a fresh wave of spending cuts, the warm reception by many Senate Republicans to a new bipartisan budget plan revealed a thawing in GOP attitudes on new tax revenues.

President Barack Obama also lauded the deficit-reduction plan put forward by a bipartisan "Gang of Six" Senate lawmakers, which calls for well over $1 trillion in what sponsors delicately called "additional revenue" and some critics swiftly labeled as higher taxes.

The plan by the Gang of Six is far too complicated and contentious to advance before an Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would shake the markets, drive up interest rates and threaten to take the country back into a recession. But the plan's authors clearly hope it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

Speaking on the Senate floor Wednesday morning, Democratic leader Harry Reid said he was confident Obama and congressional negotiators could avoid a government default, but the Senate still needed to hear from the House.

"We have a plan to go forward over here so I await word from the Speaker," said the Nevada lawmaker, who also mentioned that he spoke to Obama Tuesday night.

At a brief appearance with reporters Wednesday morning, House Minority Leader Nancy Pelosi, D-Calif., replied "No" when asked whether she would advise Democratic lawmakers to vote against the Gang of Six proposal.

But shortly afterward, her spokesman, Nadeam Elshami, expressed uncertainty that her remark represented a definitive position, cautioning that the plan lacked specifics and was still subject to negotiation.

In the House, the 234-190 vote Tuesday to pass the House GOP "cut, cap and balance" plan reflected the strength of tea party forces elected in last year's midterm election. GOP conservatives reveled in their victory, however temporary it may be, since the plan faces a White House veto threat and is a dead letter in the Senate anyway.

"Let me be clear. This is the compromise. This is the best plan out there," said Rep. Jim Jordan, R-Ohio, head of a conservative House group known as the Republican Study Committee.

The GOP measure would impose an estimated $111 billion in immediate spending cuts next year and would cap overall spending at levels called for in the House's April budget plan, backed up by the threat of automatic spending cuts. But what conservatives like most about it is its requirement that Congress approve a balanced budget amendment to the Constitution — a step that requires a two-thirds vote in both House and Senate — before any increase in the current $14.3 trillion debt limit can be shipped to Obama.

Now that the House has blown off steam, Obama said Tuesday that he wants to "start talking turkey" with top congressional leaders like House Speaker John Boehner, R-Ohio, Senate Majority Leader Harry Reid, D-Nev., and Senate GOP leader Mitch McConnell of Kentucky. A White House meeting had yet to be scheduled, though Obama seemed to hint one could take place Wednesday.

Reid has lined up behind a controversial McConnell plan to allow Obama to order up as much as $2.5 trillion in new debt without approval by Congress, which could only block the administration from issuing new debt if Congress disapproves by a veto-proof two-thirds margin in both House and Senate.

In exchange, Reid wants to attach to the McConnell plan a requirement for a bipartisan panel of 12 lawmakers to negotiate on a compromise that could come up for a vote later this year.

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