WASHINGTON—After debt talks between the two parties collapsed once again over the weekend, House Speaker John Boehner (R-Ohio) seemed increasingly pessimistic that President Barack Obama’s dream of a “grand bargain” deal could be achieved and passed by both houses of Congress in time to beat the Treasury Department’s Aug. 2 debt ceiling deadline.
Hitting the Sunday morning talk shows, Boehner declared that congressional Republicans would be prepared to go it alone and forge on with their own plan if a bipartisan deal cannot be achieved.
“I think the preferable path would be a bipartisan plan that involves all the leaders, but it’s too early to decide whether that’s possible. If a bipartisan bill is not possible, I and my Republican colleagues in the House are prepared to move on our own,” the speaker said on “Fox News Sunday.”
With a little more than a week left until Aug. 2, the day Treasury Secretary Timothy Geithner insists is the last day that the Treasury can meet all of its obligations, Boehner expressed his belief that a grand bargain deal would be very difficult to achieve.
According to Boehner, a two-stage solution to the debt-ceiling impasse would be a more likely scenario. Such a plan would involve a short-term increase of the debt ceiling, after which lawmakers would continue to negotiate a long-term debt-reduction deal.
“There is going to be a two-stage process. It’s not physically possible to do all of this in one step,” said Boehner to Fox News’s Chris Wallace.
Boehner also said his plan would be within the frame work of the “Cut, Cap, and Balance Act of 2011,” which was passed by the House last week, but died in the Democratic-led Senate.
Under a tentative two-stage plan, Congress would raise the debt ceiling by $1 trillion while immediately finding cuts in federal agency expenditures by the same amount over the next 10 years. Congress would then proceed with a plan that would produce an additional $3 trillion in savings through entitlement reforms and an overhaul of the tax code. Such an effort would be led by another bipartisan debt-reduction committee comprising of 12 legislators from both parties and both houses of Congress.
However, the Republicans are insisting on a short-term debt ceiling increase that would come up against yet another vote by the end of this year.
In contrast, Democratic leaders, while open to a two-vote solution, are calling for a larger, $2.5 trillion increase in the debt ceiling that would last through the end of 2012 and the next election cycle. Democrats argue that the weak economic recovery should not have the threat of a debt default hanging over its head.
While it is a scenario that is becoming increasingly unlikely, the White House is still pinning its hopes on negotiating a long-term bipartisan debt deal that would make significant federal spending cuts while raising additional tax revenues.
Meanwhile, Treasury Secretary Timothy Geithner is becoming increasingly anxious about whether politics will prevent a debt ceiling increase from happening.
“Both leaders recognize they’re running out of time. They need to get this process moving in the House by Monday night to achieve that [August 2] deadline,” said Geithner to Christiane Amanpour on ABC’s “This Week.” “They need to have a framework that they know with complete confidence will pass both houses of Congress, that is acceptable to the president, and that should happen today.”
On Sunday, government leaders also eyed the Asian financial markets nervously before they opened in the evening. The behavior of those markets is likely to be the first real indicator of the potential financial and economic fallout that would result from a failure to increase the debt ceiling.
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