WASHINGTON — Democratic and Republican congressional leaders shopped competing debt-crisis solutions and President Barack Obama canceled fundraising appearances Monday, as a politically gridlocked capital lurched into a climactic last full week before the Aug. 2 default deadline.
Even amid acknowledgments by U.S. leaders of the need to reassure jittery investors, world markets slipped and both the Dow Jones and Standard & Poor's 500 were down in early trading on Wall Street with the Aug. 2 deadline to raise the government's borrowing limit fast approaching.
Efforts to break the impasse intensified Monday as Republican Speaker John Boehner and Senate Democratic Leader Harry Reid planned to lobby their deficit reduction plans with their respective House and Senate caucuses after the Obama White House and Congress made little apparent headway in private talks over a long, steamy weekend.
Boehner was set to meet with his chamber's Republicans to discuss the GOP's clash with Obama over extending the government's borrowing authority. The Ohio Republican planned to unveil a new debt ceiling plan at the GOP meeting and post it online later in the day, a spokesman said.
Aides said Boehner's plan was a two-step process, with an immediate $1.2 trillion in cuts and spending caps coupled with a $900 billion debt ceiling increase, followed by creation of a congressional committee charged with producing nearly $2 trillion in additional cuts. The debt ceiling needs to be increased by about $2.4 trillion to last until 2013, the time frame that Obama and Democrats are insisting on, but which would not be immediately permitted under Boehner's plan.
Instead Boehner's plan would condition the full debt ceiling increase until 2013 on congressional approval of his proposal. Boehner's plan also requires both the House and the Senate to vote on a balanced budget amendment, a goal of conservatives. But the increase in the debt limit is not directly tied to the balanced budget amendment issue.
Reid called Boehner's proposal "a nonstarter in the Senate and with the president" because it would permit only a short-term increase of the sort that has already been rejected by Democrats. Boehner's office rejected that description.
Reid, D-Nev., said Sunday that Boehner's proposal "would not provide the certainty the markets are looking for and risks many of the same dire economic consequences that would be triggered by default itself."
After meeting at the White House Sunday evening with Obama and House Democratic Leader Nancy Pelosi, D-Calif., Reid said he was crafting his own new $2.7 trillion package of spending cuts that would also push the government's borrowing authority through next year, a timeline that Obama and top Democrats are demanding. It would do so without any new revenues, Reid said, thus meeting GOP demands for no new taxes, and Pelosi said Reid's plan also avoided touching Medicare, Medicaid and Social Security.
But Reid's plan was already being privately rejected by Republicans concerned that the cuts it contains would prove illusory.
Sen. Chuck Schumer, the No. 3 Democrat in the Senate leadership, said Monday one difficult reality is that no debt-crisis solution can be successful unless it has the support of five top players: Obama, Boehner, Reid, Pelosi and Senate Minority Leader Mitch McConnell. But Schumer also said he thought Reid's proposal had the best chance of succeeding.
The competing plans were emerging after debt talks between Obama and Boehner on an ambitious $4 trillion package of spending cuts and revenue increases — the so-called "grand bargain" — collapsed spectacularly when Boehner walked out Friday. The speaker at the time accused Obama of moving the goalposts with demands for more taxes. The White House disputed that, but the focus of the talks has now largely moved from the White House to Capitol Hill.