Senate rejects House GOP budget-cutting plan

By Jim Kuhnhenn

Associated Press

Published: Friday, July 22 2011 9:34 a.m. MDT

WASHINGTON — The Senate on Friday firmly rejected a House Republican bill to slash spending and require a balanced-budget amendment, leaving unresolved with just days to go the urgent issue of increasing the nation's borrowing powers.

The 51-46 Senate vote against the tea party-backed measure — which had been expected in the Democratic-run chamber — came shortly after House Speaker John Boehner told reporters he and President Barack Obama had failed to reach a separate agreement to resolve the debt crisis.

"There was no agreement, publicly, privately, never an agreement, and frankly not close to an agreement," Boehner said. "So I suggest it's going to be a hot weekend here in Washington, D.C."

If progress is to be made over the weekend in the nation's steamy capital, it will have to be made behind closed doors and not in the open.

Senate Majority Leader Harry Reid, D-Nev., canceled planned weekend Senate sessions, increasing the pressure on Obama, Boehner and other top-level negotiators to strike a deal.

Reid said that talks ongoing between Obama and Boehner are focused on producing legislation involving taxes and that the House would have to act before the Senate, because tax measures must originate in the House.

Boehner underscored his willingness to keep negotiations going, telling reporters, "As a responsible leader, I think it is my job to keep likes of communications open."

The administration says the government is in danger of defaulting for the first time in its history after August 2 unless Congress raises the federal debt ceiling so it can keep borrowing enough to pay its bills.

But Democrats and Republicans have been deadlocked over terms of a deficit-reduction package linked to the debt-limit increase, with Democrats demanding some tax increases and Republicans insisting on doing it just with spending cuts.

The focus now is on efforts by Obama and Boehner to come up with an ambitious $4 trillion "grand bargain" that would secure the support of rank-and-file lawmakers. But wide differences still remain.

The continuing Obama-Boehner talks kept alive the possibility of substantial deficit reduction that would combine cuts in spending on major benefit programs like Medicare and Medicaid and revenue increases through a broad overhaul of the tax code.

"We have the opportunity to do something big and meaningful," Obama declared in a newspaper opinion piece. Later Friday, the president took his case to the public again in a town hall-style meeting. Earlier, from the Capitol, Boehner said House Republicans were prepared to compromise and prodded Obama: "The ball continues to be in the president's court."

Even as Republicans contended with the demands of tea party-backed House members, worry was shifting to how to keep Democrats in line if a compromise is reached between Boehner and Obama.

Talk of a deal prompted a spasm of distress among Senate Democrats worried that Obama would agree to immediate cuts but put off steps to increase tax revenues that the president has said are key to any agreement. The White House immediately sought to tamp down talk of an impending deal.

Democratic officials familiar with the talks said both the cuts to benefit programs such as Medicare and a tax overhaul are too complicated to undertake quickly and would have to wait up to a year to negotiate. The officials, however, said any agreement would have to have strict requirements that would guarantee Congress had to act.

First, however, the Democratic-controlled Senate on Friday dispensed with the House-passed measure that would raise the debt limit by $2.4 trillion on the condition that Congress sends a constitutional balanced budget amendment to the states for ratification and approves trillions in long-term spending cuts.

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