It's certainly not the eleventh hour but a plan has been proposed that would allow President Obama new authority to raise the federal debt limit without cutting government spending. Senate Minority Leader Mitch McConnell, R-Ky., says his proposal offers a "last-choice option" for meeting an August 2 deadline to raise the legal limit on the national debt. Senior Democrats privately embraced the idea, saying it could offer a detour around the looming crisis.
Mcconnell says the proposal is "not my first choice." But with a bipartisan agreement looking increasingly doubtful, he said they're certainly not going to send a signal to the markets and to the American people that default is an option. Senate Majority Leader Harry Reid, D-Nev., has left the door open to the idea, saying he is willing to look at this.
The White House reacted cautiously to the McConnell plan. Press secretary Jay Carney said in a statement that Obama is still committed to seizing this unique opportunity to come to agreement on significant, balanced deficit reduction.
House Republicans were more openly skeptical. Aides said it would be extremely difficult to sell the plan to the rank and file, many of whom believe they were sent to Washington to radically reduce the size of government and have vowed for months to use the debt-limit debate to do it.
Under the proposal, Congress would change the rules surrounding the debt limit for the remainder of Obama's first term. A new legal structure would be created authorizing the president to raise the debt limit by as much as $2.5 trillion in three installments. The first, an increase of $700 billion, would come immediately. The next two, worth $900 billion each, would come this fall and sometime next summer.
Obama would be required to submit to Congress an explicit request for an increase, along with a menu of proposed spending cuts equal to the requested increase. The submission of the president's first request would automatically raise the debt limit by $100 billion to give the Treasury Department breathing room while Congress considers the request.
Lawmakers would then have 15 days to pass a resolution of disapproval, giving them an opportunity to go on record against raising the debt ceiling. But Obama could veto the resolution, and the debt limit would then rise.
Reid has consulted with McConnell about making the proposal more palatable to reluctant Republicans by creating a joint committee to draft an enforceable debt-reduction plan, according to senior sources in both parties. Details are still being worked out, but the new committee would be stocked with Democratic and Republican lawmakers, and their budget-cutting plan could be fast-tracked to a vote in each chamber.