As Budget Talks Lag, Senate Leaders Work on Plan B

July 14, 2011 - 3:29 PM

WASHINGTON (AP) — As budget and debt talks founder at the White House, the top Democrat and Republican in the Senate have already turned to Plan B.

It involves an unprecedented plan to give President Barack Obama broad authority over the government's borrowing cap while allowing a bitterly polarized Congress whatever spending cuts it can muster.

GOP leader Mitch McConnell of Kentucky got the ball rolling Tuesday when he announced a dramatic plan that would allow Obama to force through an increase in the debt limit without the approval of Congress. McConnell's plan would have to pass both the House and Senate and receive Obama's signature to go into effect.

Majority Leader Harry Reid, D-Nev., is supportive of McConnell's idea but hopes for modifications, including adding a consensus package of spending cuts that have taken shape in negotiations led last month by Vice President Joe Biden and continued over the past week at the White House.

McConnell's plan, while complicated in its execution, would basically give Obama the power to order an increase in the debt limit of up to $2.5 trillion over the coming year unless both House and Senate vote by two-thirds margins. Obama would also have to offer spending cuts, but they would have to go through the normal legislative process.

Here's how it would work:

—Obama would first order a debt limit increase of $700 billion, along with a proposal to cut spending by a greater amount. Some $100 billion in new debt authorization would take effect immediately to avoid a default on Aug. 2.

—Congress would have 15 days to reject the request. If a resolution of disapproval were passed, Obama would likely veto it, and if his veto were upheld, the debt limit increase would go into effect. It takes two-thirds of both the House and the Senate to override a veto.

—Obama would be permitted to order two additional debt limit increases of $900 billion in the fall of 2011 and in the summer of 2012, along with commensurate spending cut proposals.

McConnell says he's offering the plan because he wants to ensure that the government doesn't default. In a radio interview Wednesday, McConnell said failure to raise the debt limit would probably ensure Obama's re-election in 2012. He predicted that a default would allow Obama to argue that Republicans were making the economy worse.

McConnell's plan also has political advantages for Republicans since it allows them to vote "nay" on politically poisonous debt limit votes while tying the issue firmly to Obama as he seeks re-election.

For his part, House Speaker John Boehner, R-Ohio, seemed increasingly open to McConnell's plan, despite unrest among GOP conservatives.

"Mitch described his proposal as a last-ditch effort in case we're unable to do anything else," Boehner told reporters Thursday. "What may look like something less than optimal today — if we're unable to reach an agreement, it might look pretty good a couple of weeks from now."