Default fears accompanying Hill stalemate on debt

WASHINGTON — Legislation aimed at keeping the government's bill-paying intact is stuck in neutral, putting Congress, the financial markets and the public on edge less than a week before the deadline for heading off a potentially calamitous default.

House Speaker John Boehner was forced late Tuesday to postpone a floor vote on his plan, which originally had been scheduled for Wednesday, after nonpartisan congressional scorekeepers said the proposal would cut spending less than advertised. He promised to rewrite the measure, but the move means the House can't vote on it until Thursday at the earliest.

Yet despite the stalled measure — and angry partisan rhetoric — the differences between the sides are narrowing, not widening. Boehner's plan represents significant movement from a bill the House passed last week, roughly half of its mandated spending cuts, for example. And Senate Democratic leader Harry Reid no longer is insisting on having tax increases as part of any plan to cut deficits.

Boehner, R-Ohio, needs to do more than pump up the legislation. He needs to shore up his standing with tea party-backed conservatives demanding deeper spending cuts to accompany an almost $1 trillion increase in the government's borrowing cap. Many conservatives already had promised to oppose it.

"We need more drastic cuts," said Rep. Jason Chaffetz, R-Utah. "I can't support it in its current form."

"I'm searching for a path toward yes but having a difficult time finding it," said Rep Bill Huizenga, R-Mich.

Unless he can wrestle the situation under control, Boehner risks losing leverage in his dealing with President Barack Obama and Democrats controlling the Senate.

Boehner's plan was not winning converts among some stalwart conservatives. It prompted Reid to declare that the bill was destined to fail in the Senate and it drew a White House veto threat. But it was framing the debate over how to reduce long-term deficits while raising the debt ceiling.

Tuesday's Congressional Budget Office analysis said the GOP measure would cut the deficit by about $850 billion over 10 years, not the $1.2 trillion originally promised. Even more embarrassing was a CBO finding that the measure, which would provide a $900 billion increase in the nation's borrowing cap, would generate just a $1 billion deficit cut over the coming year.

Boehner's plan would couple budget savings gleaned from 10 years of curbs on agency budgets with a two-track plan for increasing the government's borrowing cap by up to $2.7 trillion. The first increase of $900 billion would take effect immediately; the second increase could be awarded only after the recommendations of a special bipartisan congressional panel are enacted into law.

The White House says Boehner's measure would reopen the delicate and crucial debt discussions to unending political pressure during next year's campaigns and risk more uncertainty in the markets.

The White House promised to veto Boehner's measure if it were to reach Obama's desk.

It's unlikely to come to that. Reid, D-Nev., promised the measure would never make it through the Democratic-controlled Senate.

Reid held back on forcing a vote on his competing measure, which he unveiled Monday to poor reviews from Republicans like Senate Minority Leader Mitch McConnell of Kentucky. Reid appears to hope that his measure, which promises $2.7 trillion in spending cuts and would increase the debt limit enough to keep the government afloat past the 2012 elections, could emerge as the last viable option standing and could be modified with input from Republicans.

Those same Republicans blasted Reid's bill for $1 trillion in war-related savings they say are phony. But McConnell is emerging as a key figure in the endgame, and he sounded a conciliatory note in an appearance Tuesday.