Live Blog: The U.S. Debt Battle july 30, 2011

• • 8:44 am
  • Obama: "There Is Very Little Time"
  • by Associated Press
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  President Obama urged Democratic and Republican lawmakers to reach a deal quickly to prevent the government from defaulting on payments to veterans, Social Security recipients and others.
  "There is very little time," Mr. Obama said Saturday in his weekly radio and Internet address.
  "Look, the parties are not that far apart here," Mr. Obama said, claiming "rough agreement" between them on spending cuts and a process for overhauling the tax code and federal benefit programs. "There are plenty ways out of this mess."
  In the Republican radio address, Arizona Sen. Jon Kyl said it is important for the U.S. to avoid a default, but said Democrats need to work more closely with Republicans.
  "Republicans have tried to work with Democrats to avoid this result and put our country on a better path, but we need them to work with us," Mr. Kyl said.
  "Unfortunately, after weeks of negotiations, it became clear that Democrats in Washington did not view this crisis as an opportunity to rein in spending," he said. "Instead, they saw it as an opportunity to impose huge tax increases on American families and small businesses."
• • 11:52 am
  • Investors Are Bracing for Market Turmoil
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  In an effort to shield themselves from any market convulsions caused by Washington's stalemate over the debt ceiling, investors, companies and small savers are stashing billions of dollars in plain-vanilla bank accounts, taking cash out of short-term markets.
  The movement of money, akin to that during the peak of the 2008 financial crisis, is one more sign that skittishness is on the rise as officials in Washington remain deeply divided about ways to reduce the deficit and lift the debt ceiling ahead of the Aug. 2 deadline. Read a full report by Liz Rappaport and Matt Phillips here.
• • 1:08 pm
  • More Maneuvering, Little Progress
  • by John D. McKinnon
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  Senate Republican Leader Mitch McConnell plans to make another plea for a quick vote Saturday afternoon on the Senate Democrats’ debt-ceiling plan, a GOP aide said, as the two sides remained at loggerheads over how to reduce future deficits and maintain the government’s borrowing capacity.
  The Senate was expected to go back in session at around 1 p.m., with a vote on the Democrats’ plan scheduled 12 hours later, at about 1 a.m. Sunday morning. That’s the earliest the vote can occur to comply with Senate procedural rules.
  The vote is expected to fail because Democrats have only 53 votes and need 60.
  Republicans say they are willing to waive the rules so lawmakers can avoid the dead-of-night voting. But for now, Democrats appear content to dramatize Republicans’ continuing resistance to the plan sponsored by Senate Majority Leader Harry Reid of Nevada. A spokesman for Mr. Reid said Democrats would be happy to hold an earlier vote if Republicans would drop their filibuster of the bill. That would allow Democrats to pass it with a simple majority.
  McConnell spokesman Don Stewart accused Democrats of effectively "filibustering their own bill."
  The Reid bill contains a lot that Republicans previously have indicated support for, including a failsafe mechanism for extending the debt ceiling that Mr. McConnell himself crafted a few weeks ago as a backup plan.
  But Mr. Reid’s bill would give Democrats a big win by allowing the debt ceiling to be extended again next year, without the absolute need for additional spending cuts. It also contains future budget plans that assume much higher tax revenues, Republicans charged.
  Republicans and Democrats alike suggest that the real compromise deal is yet to come. GOP officials say it’s up to the White House and President Barack Obama to say what they will accept.
  Senate Republican Leader Mitch McConnell plans to make another plea for a quick vote Saturday afternoon on the Senate Democrats’ debt-ceiling plan, a GOP aide said, as the two sides remained at loggerheads over how to reduce future deficits and maintain the government’s borrowing capacity.
  The Senate was expected to go back in session at around 1 p.m., with a vote on the Democrats’ plan scheduled 12 hours later, at about 1 a.m. Sunday morning. That’s the earliest the vote can occur to comply with Senate procedural rules.
  The vote is expected to fail because Democrats have only 53 votes and need 60.
  Republicans say they are willing to waive the rules so lawmakers can avoid the dead-of-night voting. But for now, Democrats appear content to dramatize Republicans’ continuing resistance to the plan sponsored by Senate Majority Leader Harry Reid of Nevada. A spokesman for Mr. Reid said Democrats would be happy to hold an earlier vote if Republicans would drop their filibuster of the bill. That would allow Democrats to pass it with a simple majority.
  McConnell spokesman Don Stewart accused Democrats of effectively "filibustering their own bill."
  The Reid bill contains a lot that Republicans previously have indicated support for, including a failsafe mechanism for extending the debt ceiling that Mr. McConnell himself crafted a few weeks ago as a backup plan.
  But Mr. Reid’s bill would give Democrats a big win by allowing the debt ceiling to be extended again next year, without the absolute need for additional spending cuts. It also contains future budget plans that assume much higher tax revenues, Republicans charged.
  Republicans and Democrats alike suggest that the real compromise deal is yet to come. GOP officials say it’s up to the White House and President Barack Obama to say what they will accept.
  
• • 2:24 pm
  • A Letter to Reid
  • by John D. McKinnon
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  The standoff between Republicans and Democrats continued in the Senate on Saturday afternoon. To make it official, all 43 Senate Republicans delivered a letter to Majority Leader Harry Reid, underscoring their unanimous opposition to his new debt-ceiling plan.
  That means Mr. Reid’s plan, introduced Friday evening, is almost certain to be blocked in a procedural vote that currently is scheduled for 1 a.m. on Sunday morning. The plan includes about $2.4 trillion in deficit reduction and an equivalent increase in the federal debt ceiling, although Republicans dispute those numbers and argue the real budget savings would be far less.
  Democratic aides said they are having back-channel communications with some Republicans, hoping to peel off a few GOP votes. In floor remarks shortly after 1 p.m., Mr. Reid said he had had conversations with “a couple” of GOP senators that he hopes will bear fruit. But he conceded that “we have heard very little from the Republicans.” With Republicans seemingly united, Democrats need to hear from someone who can speak for the GOP caucus, he said.
  Here’s the text of the letter:
  
• • 2:24 pm
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• • 3:12 pm
  • Troops Ask: 'Will We Get Paid?'
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  Sen. Reid in a press conference read excerpts of this article from Associated Press, underscoring the importance of getting a deal done:
  
  A half a world away from the Capitol Hill deadlock, the economy and debt crisis are weighing heavily on U.S. troops in Afghanistan.
  And the top question on their minds Saturday even as bombings rocked the city around them, was one the top U.S. military officer couldn't answer.
  Will we get paid?
  "I actually don't know the answer to that question," Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, told a group of troops, while at the same time telling them they will continue to go to work each day.
  But he offered a bit more optimism than defense officials have acknowledged when those questions have come up in recent weeks.
  "I have confidence that at some point in time, whatever compensation you are owed, you will be given," said Adm. Mullen, who is making his 15th trip to Afghanistan, just two months before he retires. But, he noted, "There are plenty of you living paycheck to paycheck so if paychecks were stopped it would have a devastating impact very quickly."
  
• • 3:19 pm
  • White House Backs Reid Plan
  • by Michael R. Crittenden
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  The White House formally backed Senate Majority Leader Harry Reid's (D., Nev.) plan to raise the debt ceiling and cut federal spending on Saturday shortly before the House was slated to take a symbolic vote to oppose it.
  The Office of Management and Budget said in a statement of administration policy that it "strongly supports" Reid's plan to raise the debt ceiling through 2012.
  "It is imperative that the United States not default on the Nation’s obligations, that the full faith and credit of the United States be preserved, and that the Nation’s fiscal house be put in order," OMB said in the statement.
  The White House support for the Reid plan comes just three-and-a-half days before an Aug. 2 deadline set by the Treasury Department, after which the U.S. could run out of money to pay some of its obligations. Lawmakers from both parties on Saturday traded barbs over how to broker an impasse to raise the borrowing authority in time.
  “Let’s not waste another minute of the nation’s time on this reckless piece of legislation that we know won’t pass," Senate Minority Leader Mitch McConnell (R., Ky.) said Saturday. He and 42 other Republicans sent a letter to Reid saying they oppose his plan, effectively ensuring Democrats will not be able to reach a 60 vote threshold to move forward with the measure.
  
• • 3:28 pm
  • House Rejects Reid's Plan
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  The Republican-led House has rejected Senate Democratic leader Reid's bill. The vote, 246-173, was a pre-emptive move in the high-stakes political fight as the Senate still hasn't voted on the measure.
• • 3:32 pm
  • Boehner and McConnell Briefing at 3:30 p.m. ET
  • by John D. McKinnon
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  Senate Republican Leader Mitch McConnell is sticking with his GOP colleague, House Speaker John Boehner in their effort to get a debt-ceiling deal, despite the troubles Mr. Boehner has had getting a bill through his fractious chamber.
  The latest indication: Messrs. Boehner and McConnell will hold a media briefing on Saturday at 3:30 p.m. They’re likely to make a concerted pitch for Mr. Boehner’s version of the legislation to extend the debt ceiling. His bill would set up a two-stage process that would require further spending cuts next year in order to raise the debt ceiling again. Democrats – and particularly President Barack Obama – are pushing hard against that, arguing that further uncertainty could harm financial markets and the economy. Republicans say the Democrats’ real concern is avoiding another debt fight ahead of the 2012 election, and improving Mr. Obama’s re-election chances.
  Senate Democrats are pushing their own plan that likely would avoid a repeat of the debt ceiling fight next year. Senate Republicans are so far threatening to block that plan in votes this weekend. For his part, Mr. McConnell appears to want to return to Mr. Boehner’s formulation in the Senate, although the House bill has been tabled. Some discussions of a compromise are underway but exact details have yet to emerge. Also uncertain is whether Mr. Obama would veto a two-stage plan – as he’s threatened to – when the debt-ceiling deadline is at hand on Tuesday.
• • 4:07 pm
  • Cantor to House: Don’t Stray Too Far
  • by Michael R. Crittenden
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  With U.S. lawmakers and the White House scrambling to avert a possible default, members of the House were warned Saturday not to wander too far from the Capitol in case sudden action is needed.
  House Majority Leader Eric Cantor (R., Va.) told lawmakers Saturday afternoon that no votes were expected on Sunday but that they could be pulled back to Washington on a moment’s notice.
  "Given the critical fiscal and economic situation however members should be prepared to return to Washington quickly if needed. We may only be able to assure a few hours notice at most,” Cantor warned from the House floor.
• • 4:38 pm
  • Fidelity to Investors: Fear Is Not a Strategy!
  • by Matthew Rose
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  The giant mutual-fund firm has a pile of advice for investors beginning to freak out about what might happen if Congress can’t fix the debt-ceiling mess by early next week.
  Clearly, the firm has an incentive to encourage calm among its customers. And Washington Wire certainly is not pretending it’s even slightly competent to give investing advice. But these numbers caught our eye, based on what happened during the last big financial panic. It’s based on the firm’s own data.
  --If you panicked in Sept. 2008 (not unreasonably, given the circumstances), got out of stocks and stayed out, by March 2010, your portfolio would be down almost 7%.
  --If you sold and jumped back in within that period, you’d be looking at gains of 6.1%.
  --If you stayed in, didn’t panic, stockpiled Pepto Bismol for your ulcers and refused to check your balances, you’d have seen a jump of almost 22%.
• • 4:44 pm
  • Got Questions? Washington Wire Can Help
  • by Matthew Rose
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  Q: I’m confused. Where do things stand on the hunt for a solution to avoid America defaulting next week?
  A: Don’t worry. You’re not the only one, and that’s true of many of our elected representatives, too.
  Q: Well, aren’t we at a standstill?
  A: Yes, officially. The Republican House passed its bill, and the Democratic Senate set it aside. The Senate hasn’t really started on its bill, and yet the House has already preemptively killed it. As a practical matter, it’s not yet clear that Harry Reid, the Senate Majority Leader, even has the votes to pass his bill. He’s trying late tonight.
  Q: That sounds bad.
  A: Yes, it does.
  Q: You’re not being very comforting.
  A; Sorry.
  Q: Where are the escape hatches?
  A: Mitch McConnell, the Republicans leader in the Senate, appears set on pressuring the Senate simply to reconsider the House bill, arguing that there are few other options available.
  Q: But hasn’t President Barack Obama threatened a veto of the Republican plan?
  A: Yes, but stranger things have happened at sea.
  Q: OK, that seems implausible. What else?
  A: For weeks now, many have assumed that a compromise plan would emerge out of discussions between the two leaders in the Senate, Messrs. McConnell and Reid. They’d get a big bipartisan vote and force the House into going along as the proverbial clock ticks towards midnight.
  Q: What would such a deal look like?
  A: A giant mashup of everyone else’s plan, a huge hedgehog of a deficit-reduction agreement with ungainly bits sticking out all over, but enough sops to make enough people happy.
  Q: For example?
  A: It could have two stages, as Republicans want, which is a way to force serious reconsideration of big changes to entitlements and maybe even taxes. It also may not require an explicit second vote in Congress, as Democrats want, to avoid repeating this excruciating process early next year (an election year, don’t forget).
  Q: Hang on. Two stages, without a vote? Wouldn’t that make it easy for Congress to simply skip Part 2? If the past month has taught us anything, it’s that Washington can’t function without a nasty-sounding deadline.
  A: This is true, and this is what Republicans worry about. That’s where the so-called triggers come in. Such an agreement would include a painful provision that kicks in if Congress can’t come to terms on a second round of cuts. Earlier, Republicans proposed making the president’s health-care plan go pop. That won’t happen. But they are talking about a trigger that would change the inflation measure used by the government, which would slow the rate of growth of big entitlement programs such as Social Security.
  Q: Is there any sign of this agreement?
  A: Um, not yet. Mr. McConnell is still standing firm with the House and against the Reid bill. But we hear talks are continuing.
  Q: Where’s the White House?
  A: Probably on the sidelines. But Mr. Obama summoned Mr. Reid and Nancy Pelosi to the White House Saturday afternoon for a meeting about where things stand, and Mr. McConnell said he spoke Saturday with Mr. Obama and Vice President Joe Biden.
  Q: Probably? You mean you don’t know?
  A: Absolutely right. Anyone who tells you they know how this will turn out is foolish or lying. I hate to say it, but it’s only Saturday afternoon. If there’s zero sign of movement by Sunday night, then you might consider panicking.
• • 5:02 pm
  • McConnell Talks With Obama, Biden
  • by John D. McKinnon
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  The big news of the afternoon so far: Senate Republican Leader Mitch McConnell just said at a press briefing that he’s been talking in the last hour with President Barack Obama and Vice President Joe Biden about a way out of the debt-ceiling crisis.
  Still, there’s no indication that the two sides have yet figured out how to engineer the escape, and Mr. McConnell’s comments were designed in part to raise pressure on the White House to help steer the debate.
  Using measured but pointed language, House Speaker John Boehner and Sen. McConnell said they have turned to the White House to help find the way forward. As things stand, the Republican House proposal can’t pass the Democratic-controlled Senate, and the Senate Democratic plan, crafted by Majority Leader Harry Reid and strongly favored by Mr. Obama, can’t pass the GOP-run House.
  “The only thing standing in the way of the House proposal…is the president and Sen. Reid,” Mr. Boehner said at the press conference. “It’s time for them to tell us what they’re for [and] how they’re going to get us out of the cul de sac that they’ve driven our country into ….We’re hoping that we’ll hear from them soon about their plan.”
  Said Sen. McConnell: “My view is we ought to end [the] charade and get serious. And in the category of getting serious, I’ve spoken to both the president and the vice president within the last hour. We’re now fully engaged, the speaker and I, with the one person in America, out of 307 million people, who can sign a bill into law. I’m confident and optimistic that we’re going to get an agreement in the very near future.”
  The big fight has been over whether to have another vote early next year on extending the debt ceiling. Republicans want a second vote, in part to achieve bigger cuts and in part to put more political pressure on Mr. Obama and congressional Democrats. The president has flatly promised to veto a two-stage approach.
  The GOP leaders didn’t threaten to push through a two-stage approach, but they didn’t promise to back off either. If they somehow managed to pass a two-stage approach, that would present Mr. Obama with a daunting set of choices – veto it and risk a default, or accept it and absorb a disastrous political defeat.
  An emerging alternative possibility on Saturday afternoon was that Democrats in the Senate could peel off a few Senate Republicans to support their version, while altering the Reid bill to incorporate their suggestions. What remains unclear is whether such a plan could pass the GOP-run House, where conservative tea-party members have exerted strong influence.


• • 7:08 pm
  • Senate Kills Time With Heated Talk
  • by By Joseph B. White
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  The Senate is still killing time as a torpid Washington, D.C. Saturday afternoon slips away. Republicans have just had the floor, hammering away on their themes: The debt is out of control, President Barack Obama and the Democrats don’t have a credible plan, the president’s demand that there be no further debt ceiling votes until after the 2012 election is political posturing.
  Among the most heated GOP orators: Sen. Orrin Hatch (R., Utah), who lashed out at the Treasury Department for not offering more explicit information about when the nation will officially run out money if no action is taken to lift the legal cap on government borrowing.
  “Call Treasury,” Mr. Hatch implored, borrowing a gambit from President Obama. “Send them an email. Send out a tweet.”
  Moments later, Mr. Hatch took it further: “We should not run Treasury … like Bernie Madoff ran his hedge fund…taking in cash and saying, ‘trust me.’ ’’
  Mr. Hatch’s tough talk could come in handy if, as many expect, he faces a tea party-backed primary challenge to his 2012 re-election campaign.


• • 9:40 pm
  • The Senate In A Word Cloud
  • by Joseph B. White
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  The self-styled “world’s greatest deliberative body” is deliberating, and deliberating and deliberating headed toward a scheduled 1 a.m. showdown vote on the debt ceiling issue.
  
  Here’s a way to have fun with all that verbiage. Plug the transcripts of senatorial speeches into a word cloud generator.
  
  We tried it with two examples: Florida Republican Sen. Marco Rubio’s impassioned speech this afternoon and a later one by Massachusetts Democratic Sen. John Kerry. “I can't compromise about which part of the house I'm going to save. You save the whole house or it will all burn down,” he said. (Mr. Rubio’s 14 minute speech got a rave review in a Saturday evening blog post by conservative pundit William Kristol.)
  Mr. Kerry, in his address, ruefully imagined that “there are a lot of Americans watching Washington and scratching their heads, and saying, ‘how did these people get here?’
  We tried two easily located programs on the web, www.wordle.net and tagcrowd.com, and plugged in the text of Mr. Rubio’s speech from his Senate website, and the text of Mr. Kerry’s speech, emailed by his staff.


• • 9:54 pm
  • McConnell Said to Be Pushing For Balanced Budget Amendment Trigger in Debt Deal
  • by John D. McKinnon
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  Republican leaders appear to be digging in on their demand to include a balanced budget amendment as part of the debt-ceiling deal. That’s riling Democrats, but could create a powerful political issue for the GOP, win or lose.
  Several people familiar with the situation said that in conversations on Saturday with the White House, Senate GOP leader Mitch McConnell of Kentucky has continued pushing for the BBA as one potential trigger to ensure that further spending cuts take place next year. Exact details of the proposal were unclear, but if Congress couldn’t agree on further deficit-reduction steps next year, then passage of the BBA could be a trigger that would help to satisfy the need for further fiscal discipline. Other policy changes have been discussed and could also be part of a multi-part trigger mechanism. It’s even possible there could be an alternative to BBA passage, in case Congress balks.
  The BBA would be an amendment to the U.S. Constitution requiring Congress in the future to balance its budget. The BBA has emerged as among the most popular ideas for long-term deficit reduction among conservatives. It’s so popular among House tea party Republicans that BBA approval had to be added to the House debt-ceiling bill late this week in order to win over the GOP votes needed for passage.
  The BBA also is popular among voters, in part because it’s one of the few comprehensible ideas in the often numbingly complex budget debate.
  But many Democrats as well as some Republicans have reservations about it, and some budget experts also question the idea’s wisdom.
  Democratic Majority Leader Harry Reid of Nevada has offered to hold a vote on the BBA in the Senate, where its prospects are highly uncertain. But that’s not enough for tea-party conservatives. Including the BBA as a possible trigger for a second round of fiscal discipline would give it higher prominence, and could serve to win over some of those GOP votes. But President Barack Obama has rejected Mr. McConnell’s proposal to use BBA passage as a trigger in the debt deal, Democratic officials said.
  Still, Republicans are likely to keep talking up the idea.


• • 10:56 pm
  • Reid Calls for Delay of Test Vote on His Debt Plan
  • by Joseph B. White
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  Senate Majority Leader Harry Reid, (D., Nev.) appeared on the Senate floor shortly after 10 p.m. Saturday, and asked to delay a test vote on his debt ceiling proposal until 1 p.m. Sunday. A vote to cut off debate on the measure had been scheduled for 1 a.m. Sunday.
  Mr. Reid suggested that efforts were underway to hammer out a measure with Republican leaders that could get 60 Senate votes and also pass the House.
  “We should give everyone as much room as possible to do their work,” Mr. Reid said.