Debt and spending deal picks up momentum in Senate

Published 2:17 pm Monday, August 1, 2011

WASHINGTON (AP) — The White House and congressional leaders worked Monday to align lawmakers from both parties behind their formula for averting a financial meltdown and halting the government’s prolific spending habits. Despite resistance from both liberals and conservatives, momentum appeared to be building in support of the compromise deficit-reduction plan.

In an apparent show of confidence, leaders in the House said they planned to bring the plan to the floor for a vote Monday afternoon. Rules Committee Chairman David Dreier, R-Calif., said there would be an hour of debate before moving to a vote.

In the Senate, where one senator can hold up action, Majority Leader Harry Reid said he was hoping to get agreement to allow a vote Monday evening. “We need to send this to President Obama as soon as we can.”

A member of the Republican leadership in the Senate predicted at least 30 GOP votes. “Maybe 35 will support it in the end. There will be some who will pull back,” Sen. Mike Crapo, the deputy Republican whip, told reporters, as climactic votes approached in both the House and Senate on the long-sought spending plan.

Leaders in both chambers were meeting with their rank-and-file to promote the package, and President Barack Obama sent out a video message to sell Democrats on the plan. “This has been a long and messy process,” he said. “As with any compromise, the outcome is far from satisfying.”

Obama was also doing debt-related tweeting. “The debt agreement makes a significant down payment to reduce the deficit — finding savings in both defense and domestic spending,” he said in one.

“We’ll know over the next two to three hours,” said House freshman Rep. Tom Reed, R-N.Y., when asked if House Speaker John Boehner had the votes in the House, where conservatives have been more resistant to the compromise.

Reid opened the day’s session in the Senate by declaring the deal shows that the often-dysfunctional Senate can come together when it counts. “People on the right are upset, people on the left are upset, people in the middle are upset,” he said. “It was a compromise.”

Crapo’s assessment came as Vice President Joe Biden, who played an instrumental role in successful weekend efforts to hammer out an accord, went to Capitol Hill to sell the plan in separate meetings with House and Senate Democrats.

Relief around the world was indisputable, with Asian shares on Monday enjoying one of the best sessions in weeks. The advance continued in Europe. Wall Street opened higher, but faltered on a report that a key manufacturing index had dropped sharply in July.

Whatever momentum could be claimed for the deficit-reduction plan, Congress still has precious little time to avert a potentially devastating default on U.S. obligations. And there was little dispute that the endgame product contained plenty to offend lawmakers of both parties, and tea party sympathizers as well.

Sen. John McCain conceded as much, saying he’d have to “swallow hard” to vote for it because of cuts in defense spending. But the Arizona Republican said lawmakers had little choice in the face of the specter of default.

Fellow Republican Lindsey Graham of South Carolina said he was a no vote. “Simply stated, it locks us into more debt, bigger government and most devastating of all, a weakened defense infrastructure at a time when we face growing threats.”

Another House Republican, Michael Turner of Ohio said he was not ready to endorse the package as he left a closed-door meeting of House GOP lawmakers. Turner is a member of the House Armed Services Committee, and potential cuts to defense spending could be an issue among some Republicans.

Sen. Susan Collins, a moderate Republican from Maine, said she was undecided because of concerns about cuts to rural hospitals and home health care as well as defense. “I want to avoid the kind of hollowed-out military we saw after Vietnam,” she said.

The compromise plan agreed to late Sunday would mix a record increase in the government’s borrowing cap with the promise of more than $2 trillion in spending cuts.

Democratic votes are certain to be needed to pass the measure in the Republican-dominated House, just as Republicans will be needed to clear the measure through the Democratic Senate. Liberal Democrats were already complaining that Obama had given away too much to GOP leaders.

Rep. Elliot Engel, a liberal Democrat from New York, said he was leaning no because the plan could lead to cuts to Medicare and other benefit programs. Boehner should get the votes from his majority Republicans, Engel said. “I don’t think we’re under any obligation to support this package.”

“Now, is this the deal I would have preferred? No,” Obama said. “But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.”

The legislation would slice more than $2 trillion from federal spending over a decade and permit the nation’s $14.3 trillion borrowing cap to rise by up to $2.4 trillion, enough to keep the government afloat through the 2012 elections — a key objective for Obama, whose poll numbers have sagged as the summertime crisis dragged on.

John Boehner, R-Ohio, telephoned Obama at mid-evening to say the agreement had been struck, then immediately began pitching the deal to his fractious rank and file.

“It isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town,” he said on a conference call, according to GOP officials. He added the agreement was “all spending cuts. The White House bid to raise taxes has been shut down.”

House Democratic Leader Nancy Pelosi, D-Calif., was publicly noncommittal. “I look forward to reviewing the legislation with my caucus to see what level of support we can provide,” Pelosi said in a written statement. But Democratic officials said she was unlikely to do anything to try to scuttle the package.

“This deal trades people’s livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it,” said Rep. Raul Grijalva, D-Ariz.

Tea party favorite and presidential candidate Michele Bachmann, R-Minn., countered that the deal “spends too much and doesn’t cut enough. … Someone has to say no. I will.”

The government presently borrows more than 40 cents of every dollar it spends, and without an infusion of borrowing authority, the government would face an unprecedented default on U.S. loans and obligations — like $23 billion worth of Social Security pension payments to retirees due Aug. 3.

The increased borrowing authority includes $400 billion that would take effect immediately and $500 billion that Obama could order unless specifically denied by Congress. That $900 billion increase in the debt cap would be matched by savings produced over the coming decade by capping spending on day-to-day agency budgets passed by Congress each year.

A special bipartisan committee would be established to find up to $1.5 trillion in deficit cuts, probably taken from benefit programs like farm subsidies, Medicare and the Medicaid health care program for the poor and disabled. Republicans dismissed the idea that the panel would approve tax increases.

Any agreement by the panel would be voted on by both House and Senate — and if the panel deadlocked, automatic spending cuts would slash across much of the federal budget. Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare.

Top Obama aide Plouffe said in a morning network television interview that the administration wasn’t giving up on pushing for new tax revenues down the road.

“The only way to really reduce the deficits significantly in a smart way is to make sure there is smart entitlement reform and closing of loopholes and tax reform,” he said.

But Republicans set the parameters of the debate, with Boehner successfully winning spending cuts equaling the amount of the debt increase — though the cuts phase in over time and future Congresses will have ample temptation to find ways around stringent spending caps called for in the pact.

Obama said such appropriated accounts would be left with the lowest levels of spending as a percentage of the overall economy in more than a half-century.

In the end, the deal was a split-the-differences compromise, with plenty for both sides to dislike. House GOP defense hawks came out on the losing end. So too did Democratic liberals seeking tax increases.

Plouffe was interviewed on ABC’s “Good Morning America,” CBS’s “The Early Show” and NBC’s “Today” show. McCain appeared on CBS.