Politics

House GOP Moves Toward Vote on Boehner Bill As Obama Urges Public to Act

According to FBN's Charlie Gasparino sources at major banks are saying the administration is downplaying the chance of default even if the debt ceiling isn't raised in private talks with bankers.

 

House Republicans are preparing the steps for a vote on a debt ceiling package in advance of a Wednesday vote, after House Speaker John Boehner said President Obama's "balanced approach" to deficit reduction means more spending and more taxes. 

The president, speaking to Americans in a prime time address Monday night, urged them to call Congress and ask for a bill that raises taxes on higher-income earners while lifting the debt ceiling before a potential default.

"The American people may have voted for divided government, but they didn't vote for a dysfunctional government. So I'm asking you all to make your voice heard," Obama said.

House Republicans have put Boehner's bill in the shell of a Senate measure to expedite Senate consideration. It comes after the speaker and president sparred in paired addresses to the nation over the measures needed to avoid the potential of the U.S. defaulting on its loans. 

The one-to-one addresses were unusual, even to the speaker, who said before his speech, "I didn't sign up for going mano-a-mano with the president of the United States."

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But Boehner, pressed by a large class of freshmen conservatives unwilling to compromise on tax hikes and increased debt, said the president's party is the only one stuck on a deal. 

"The House has passed a bill to raise the debt limit with bipartisan support. And this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill -- one that was developed with the support of the bipartisan leadership of the U.S. Senate," Boehner said.

In his remarks from the White House, however, Obama said the Republican proposal would hurt students, seniors and the middle class by forcing Draconian cuts on government spending.

"That is no way to run the greatest country on Earth. It is a dangerous game we've never played before, and we can't afford to play it now. ... We can't allow the American people to become collateral damage to Washington's political warfare," the president said.

Obama stepped to the microphones a few hours after first Republicans, then Democrats drafted rival fallback legislation Monday to avert a potentially devastating government default in little more than a week. He said he wants tax increases paired with spending reductions that will put the U.S. debate past the next election and keep the country from defaulting on its loans to creditors, set to come due on Aug. 2.

"The entire world is watching. So let's seize this moment to show why the United States of America is still the greatest nation on Earth," Obama said.

Boehner -- delivering the first such live response aside from the State of the Union in nearly four years -- said Obama was looking for a "blank check" to fund his administration's "spending binge."

"That is just not going to happen," he said, adding that over the last six months, he has tried "to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country, something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track."

Without signed legislation by day's end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could badly harm a national economy struggling to recover from the worst recession in decades.

Boehner has offered a proposal this week that could pass the House and allow Congress to raise the debt ceiling beyond the $14.3 trillion limit authorized by earlier legislation.

The Republican plan aims for about $3 trillion in spending cuts over 10 years but would split the debt increase into two parts. Congress would first vote for a debt-ceiling hike of $900 billion along with spending cuts worth slightly more, teeing up Congress for another vote next year only after a 12-member committee finds another $1.8 trillion in deficit savings. The plan would also require both chambers of Congress to vote on a balanced-budget amendment and cap discretionary spending.

Senate Majority Leader Harry Reid has offered an alternative that would cut $2.7 trillion in spending, using budgeting gimmicks that include about $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It would not increase taxes and the debt ceiling hike would be good until approximately 2013. A Democratic official said Reid has held off introducing it in the Senate to see what happens with Boehner's bill and use his own as a potential lifesaver.

A group of economists and lawmakers who've designated themselves the Committee for a Responsible Federal Budget said at this point -- with only a week to meet the deadline -- either the Reid or Boehner option is viable, but something needs to be done fast. In either case, the U.S. will likely face a lowering of its credit rating.

"We obviously have to avoid default, but any deal must also reassure markets that policymakers are serious about dealing with our national debt," said Maya MacGuineas, president of the group.

Faced with a choice, the president made clear he backs the Democrats' approach.

"Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn't solve the problem," he said.

However, the president also suggested he's still up for raising taxes.

"Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don't get. ... What we're talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade -- millionaires and billionaires -- to share in the sacrifice everyone else has to make. And I think these patriotic Americans are willing to pitch in. In fact, over the last few decades, they've pitched in every time we passed a bipartisan deal to reduce the deficit."