If Aug. 2 arrives with no deal, the government’s credit ratings will be reduced. Officials are forecasting that a variety of government payments, including Social Security checks, will be jeopardized, and that damage to the economy - nationally and worldwide - will be swift and widespread.
Despite the high risk, Republicans and Democrats in Washington remained unable to bridge their differences on a debt limit package, which would include major cuts in projected government spending. After Boehner broke off talks with Obama on a more sweeping bargain for more than $3 trillion in cuts and tax increases on Friday, a weekend of behind-the-scenes meetings in a largely empty Capitol produced no evidence of a breakthrough.
Boehner announced yesterday that he will move forward with a short-term proposal that could be backed by House Republicans but won instant opposition from Democrats and a presidential veto threat. “I would prefer to have a bipartisan approach to solve this problem,’’ Boehner said yesterday morning on Fox News Sunday. “If that is not possible, I and my Republican colleagues in the House are prepared to move on our own.’’
President Obama hosted Democratic leaders for more than an hour at the White House last night, and afterward the Senate majority leader, Harry Reid, rejected Boehner’s short-term solution.
Reid was planning to release a plan of his own that is likely to be opposed by House Republicans and maybe even his own caucus. His plan would cut spending by $2.7 trillion over 10 years, and allow the debt limit to be raised by about the same amount. The plan is not expected to include any new tax revenue, which could cause friction from Senate Democrats who have wanted new revenues to accompany budget cuts.
“We hope Speaker Boehner will abandon his ‘my way or the highway’ approach, and join us in forging a bipartisan compromise along these lines,’’ Reid said last night in a statement.
