House inaction on debt strengthens Harry Reid’s bargaining position

By Karoun Demirjian

Friday, July 29, 2011 | 1:55 a.m.

For a second day in a row, House Speaker John Boehner had to depart the Capitol without bringing up his debt limit bill for a vote — this time, because he just doesn’t have the 217 Republicans he needs lined up to say “aye.”

That’s not good for the speaker, who said earlier Thursday that his bill was a compromise measure and that “when the House takes action today, the Senate will have no more excuses for inaction.”

But right now, it’s the House’s inaction that’s holding up the process. It’s a twist that’s only strengthening Senate Majority Leader Harry Reid’s bargaining position.

Boehner and Reid are backing separate proposals that, despite all their stumping, are equally lost causes in their current form. The Senate won’t pass the House’s bill — Reid has promised to kill it as soon as it arrives on his doorstep — and Reid’s bill is a non-starter in Boehner’s House.

That means the only way forward for a Congressional solution is compromise and crafty timing.

Whether or not the House is able to pass Boehner’s bill, the Senate has the first crack at a compromise, and the Democrats who run the Senate already have a proposal all but ready to go.

Their proposal, as outlined by aides, appears to be melding not just Reid’s and Boehner’s competing proposals but elements of a backup plan Reid was floating with Senate Republican Leader Mitch McConnell earlier this month.

The individual plans are as follows:

Reid’s would raise the debt limit by $2.4 trillion, enough to take the country’s borrowing authority into 2013, and pay for it with $2.7 trillion in cuts and no revenue increases. About a $1 trillion of cuts are accounted for via a reduction in war spending as U.S. operations in Iraq and Afghanistan wind down.

Boehner’s plan would lift the debt ceiling by a guaranteed $900 billion, paid for with $917 billion of cuts to discretionary spending, enough to last to the end of this year. The plan also outlines a potential further debt limit hike of $1.6 trillion, but that would depend on Congress first voting on a constitutional amendment to balance the budget and approving further budget cuts suggested by a new, 12-member joint commission of lawmakers from both parties.

The Democrats’ compromise seeks to combine the structure of Boehner’s plan with the stability of Reid’s.

The revised proposal would be a two-part structure that raises the debt ceiling for a limited time with discretionary cuts, giving GOP lawmakers the ability to require votes on various measures. Those measures potentially include a balanced budget amendment, a bundle of spending cuts recommended by a joint commission, even a vote on the Gang of Six’s proposal.

But if Congress can’t come to an agreement by the next default deadline, President Barack Obama would have some recourse. He could send a schedule of cuts to Congress and Congress would issue a disapproval resolution, which he would then veto. If Congress couldn’t muster the votes to override his veto, Obama could raise the debt limit without further argument.

That last part is the structure that was the backbone of the Reid-McConnell plan, and before that even, McConnell’s idea for a backup option.

The Reid-McConnell plan split opinion in both parties when it was unveiled and in the last week, McConnell has distanced himself from it almost entirely. A spokesman for McConnell said Thursday night that McConnell wanted Boehner’s plan to move through the Senate and that the leader’s idea had never been anything more than a last-minute, backup option.

But with only five days left until default, the country’s getting awfully close to final crunch time.

That could mean payments stop on unissued Social Security checks, Medicare reimbursements, veterans’ benefits, federal salaries, educational loans and loans to foreign governments.

It also means U.S. credit will likely be downgraded for the first time in the country’s history, making interest rates across the nation rise.

According to the White House, at 12:01 a.m. Aug. 3, the U.S. will no longer be able to meet all of its fiscal obligations and will start to default.

The closer the Senate votes to that final hour, the less time there will be for the House to push back.

Reid has said he’s waiting for the House to consider Boehner’s vehicle — partially because even though he promised to kill it, the procedural momentum behind the House bill makes it a lot more attractive to Reid as a vehicle for a compromise measure than if he has to bring his own bill up from scratch.

Reid’s going to need a filibuster-proof majority on any bill, and those take time, 30 hours each. Using a House bill as a vehicle cuts out one of the procedural, filibuster-proof steps it takes to get a bill going through Congress, saving those 30 hours.

But that depends on the House passing that bill first. If Boehner reaches the end of Friday with no progress, Reid’s going to have to move on his own, because he needs to leave House leaders time to kick, scream and ultimately put on the floor the compromise measure that gets through the Senate.

That inevitability, in fact, is what’s fueling the standoff in the House.

The Republicans Boehner can’t pull into line are strong-willed Tea Party and libertarian types who have no interest in backing any plan that doesn’t deliver on their debt reduction principles — which are more Draconian than the upfront cuts in Reid’s or Boehner’s plan.

They also have no interest in making a political compromise for a bill they know won’t go anywhere because it’s being blocked in the Senate. All 53 Senate Democrats and Democrat-leaning Independents have said they will vote down Boehner’s bill.

Those Republicans won’t be the ones to vote for compromise either. Like the government shutdown-avoiding budget bill back in April, a compromise measure will likely rely heavily on Democrats and moderate Republicans.

If Boehner can’t come to the final hour with some sort of victory to claim, it forces his hand to accept that compromise, and the Democrats’ help, which hasn’t been what he’s promising to do.

Boehner and the GOP’s other leaders aren’t caving just yet, though.

“I think investors small and large in America should know that despite the fact that we’re not there yet, house Republicans’ objectives remain the same,” said Rep. Mike Pence, the GOP’s former Repubican Conference chairman, who was meeting with leaders in Boehner’s offices Thursday night.

“We’re going to rest up over the evening and go right back to work in the morning, and we’re going to keep working this thing until we find a way to pay the nation’s bills and live within our means,” he said.