With the deadline of Aug. 2 quickly approaching, an old deal has resurfaced, redesigned for 2011 to save U.S. debt from reaching the self-imposed debt ceiling. It was in 2008 when Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., saved the financial industry bailout. That bailout is the blueprint for this new effort to keep U.S. government solvent. The Reid-McConnell plan would allow the debt ceiling to rise by $2.5 trillion to $16.8 trillion in three installments. As a result, the next existential borrowing crisis would be the problem of the next Congress and the winner of the next presidential election.
The process would allow Republicans to vote three times before Election Day to prevent the new borrowing, and require Democrats to come up with enough votes in their ranks to keep the bond sales going. It would also create a panel of a dozen lawmakers and tell them to write a deficit-reduction plan by the end of this year or early next year. The plan is designed to be a fall-back plan if present negotiations fail.
Treasury Secretary Timothy Geithner believes the Reid-McConnell debt limit plan is fast becoming Plan A for raising the debt ceiling and averting a fiscal crisis. According to Geithner Senate leaders are negotiating a way to sidestep a default while providing maximum political cover for Members of Congress who believe they face a potentially career-ending vote.
For now, both chambers are moving forward with votes on a tea-party-backed Cut, Cap and Balance plan that would tie a debt ceiling increase to passage of a constitutional amendment requiring a balanced budget and deep spending cuts. Speaking on the CBS show "Face the Nation" Sunday, Senate Majority Whip Dick Durbin, D-Ill., predicted there's no chance the GOP effort would succeed.
Republican Study Committee Chairman Jim Jordan, R-Ohio, who is championing the Cut, Cap and Balance legislation, said on "Fox News Sunday" that conservatives would not support the McConnell plan. But he said it's possible Democrats and some Republicans could pass something without his group. Looking down the road, Senator Mike Johanns, R-Neb., says the pressure on Congress would ratchet up dramatically if the deadline is breached and Social Security and other payments are affected.