WASHINGTON — With the default deadline just two days away, prospects for a debt-limit deal seemed to significantly brighten early Sunday after the White House entered intense negotiations with Senate Minority Leader Mitch McConnell on Saturday in a last-ditch bid to forge a bipartisan agreement to raise the federal debt limit.
“Relief” is the way Sen. Chuck Schumer (D-N.Y.) described the mood on Capitol Hill on CNN’s State of the Union Sunday morning. “Default is far less of a possibility now then it was even a day ago, because the leaders are talking and talking in a constructive way.”
On the same show, McConnell echoed that “we had a good day yesterday” and the parties “were very close” to crafting a deal framework that he could “soon” recommend that Senate Republicans support.
“We‘re not going to have default,” McConnell stated.
“There are negotiations going on at the White House to avert a catastrophic default on the nation’s debt,” said Senate Majority Leader Harry Reid, after announcing that the vote had been pushed back to 1 p.m. Sunday. “There are many elements to be finalized, and there is still a distance to go before any arrangement can be completed. But I believe we should give everyone as much room as possible to do their work.”
He added: “I’m glad to see this move toward cooperation and compromise. I hope it bears fruit.”
The emerging agreement calls for raising the $14.3 trillion debt limit by up to $2.4 trillion in two stages, with the debt limit rising unless two-thirds of both chambers of Congress disapprove, according to officials in both parties familiar with the talks. That would extend the Treasury’s borrowing authority into 2013, satisfying President Barack Obama’s demand to avoid another showdown over the issue in the heat of the 2012 presidential campaign.
The first stage would pair an increase of roughly $1 trillion with cuts to government agencies of about the same magnitude over the next decade. In the second stage, a special congressional committee would be created to identify additional savings later this year. The size of those savings would dictate the size of the second debt-limit increase, giving Republicans the dollar-for-dollar match-up they have demanded between spending cuts and the debt-limit increase.
The focus of talks Saturday was a mechanism to force the committee to act and to ensure that Congress adopts its recommendations. Late Saturday, McConnell and Biden appeared to have settled on a trigger that would cut most government spending – including the defense budget and Medicare – by as much as 4 percent if the committee failed to produce a plan to tame the spiraling national debt, the officials said.
It was not immediately clear whether House Speaker John Boehner, R-Ohio, would accept the emerging framework, or whether he could persuade his fractious caucus to support it. But Boehner, too, showed signs of paving the way for compromise Saturday, convening a meeting of the Tuesday Group, a bloc of about 45 moderate Republicans whose votes would be key to pushing any deal through the House.
“I’d like a big, bold, bipartisan plan. I think that’s what the country needs,” Rep. Robert Dold, R-Ill., said after the meeting. “It’s certainly something I’m looking for.”
Reid’s announcement of progress in the talks shattered an air of desperation that had settled over the Capitol earlier in the day as rank-and-file lawmakers pleaded with their leaders to set politics aside and strike a bipartisan deal. After months of negotiation and weeks of debate, every black-and-white plan for cutting government spending and raising the $14.3 trillion debt ceiling was doomed or had already been shot down.
As the battle entered its final hours, the nation’s leaders were left bickering among themselves, unable to agree even on a modest version of the deal they said they were close to sealing a week ago. Their remaining differences were not especially large, but a resolution appeared elusive.
Throughout the afternoon and into the evening, Reid and McConnell conducted separate talks with the White House in search of an agreement. But the two men were barely speaking to each other, and their anger boiled over onto the Senate floor.
Reid accused McConnell of blocking the path to compromise that many Senate Republicans were eager to pursue.
“While the Republican leader is holding meaningless press conferences, his members are reaching out to me … to try to move the process forward,” Reid said testily, referring to a midafternoon news conference when McConnell and announced that they were in direct talks with Obama.
McConnell fired back that he was “more optimistic than my friend, the majority leader,” after negotiating privately with Biden. “I think we’ve got a chance of getting there,” McConnell said.
“We’re going to get a result on a bipartisan basis. That’s what I’m working on,” McConnell added, complaining that he had been forced to “cut short a conversation with the vice president” to answer Reid’s summons to a meaningless procedural vote. “I’d actually like to get back to work.”
A Democratic official familiar with the talks said Biden and McConnell were focused on combining the debt-limit plans that emerged from bipartisan negotiations among congressional leaders last weekend. That effort was cut short by Democrats, including Obama. The next day, Reid and Boehner unveiled very similar bills that would cut deeply into agency budgets and create a 12-member committee to find more savings by the end of the year.
The key difference was the length of the debt-limit extension. Boehner’s bill, which passed the House but died in the Senate, would have granted a reprieve only through February or March. Unless the committee came up with $1.8 trillion in additional savings, Congress would face another standoff over the debt limit.
Reid’s bill would increase the debt limit into 2013 and count $1 trillion in savings from winding down the wars in Iraq and Afghanistan, a move Republicans decried as an accounting gimmick.
To bridge the divide, McConnell and administration officials had been trying all week to design a mechanism to force the committee to act, giving Republicans their cuts and Obama his debt-limit increase.
Unless Congress lifts the debt limit by Tuesday, Treasury officials have said they will begin to run out of cash to pay the nation’s bills. That could force the government into default, an outcome that could devastate the sputtering U.S. recovery and global financial markets. Over the past week, the Dow Jones industrial average fell nearly 540 points amid rising anxiety about the debate in Washington.
All day Saturday, however, both parties were on the attack. In the House, Republicans were smarting over the Senate’s quick Friday night defeat of Boehner’s proposal for a short-term debt-limit increase. So the GOP returned the favor with a unanimous vote in opposition to Reid’s proposal to increase the debt limit into 2013.
It was not a real vote. The Reid measure was still pending before the Senate. So Rep. David Dreier, R-Calif., chairman of the House Rules Committee, drew up his own version of the Reid bill and sent it to its death on the House floor, where 11 Democrats joined Republicans in rejecting the measure, 246-173.
The atmosphere was just as tense and bitter in the Senate, where McConnell delivered a letter to Reid signed by 43 Republicans declaring their opposition to his version of the debt-limit bill.
Four Republican senators did not sign the letter: Olympia Snowe and Susan Collins of Maine, Scott Brown of Massachusetts and Murkowski. But there was little evidence that Reid’s bill could muster the 60 votes needed to overcome a Republican filibuster – a fact Reid tacitly acknowledged when he rejected McConnell’s offer to stage a vote early Saturday evening.