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‘Gang of 6′ Debt Plan Gains Momentum as Aug. 2 Deadline Looms

July 20, 2011 at 12:00 AM EST
The effort to raise the country's borrowing limit saw the resumption of talks between President Obama and top congressional leaders on Wednesday. Kwame Holman reports on the lawmakers' race against the Aug. 2 deadline.
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JEFFREY BROWN: And we turn to the effort to raise the country’s borrowing limit, which today saw the resumption of talks between the president and top lawmakers in Congress.

NewsHour congressional correspondent Kwame Holman has our report.

KWAME HOLMAN: It was a new sign of urgency and of hopes for a deal. President Obama summoned congressional leaders to the White House to resume talks aimed at averting a government default. Press Secretary Jay Carney pointed to the calendar and the Aug. 2 deadline for raising the federal debt ceiling.

JAY CARNEY, White House press secretary: We are, as the president said yesterday, in the 11th hour. We need to meet, talk, consult, narrow down what our options are and figure out in fairly short order, you know, which train we’re riding into the station. Right now, there are multiple options being discussed.

KWAME HOLMAN: One option the president previously had ruled out was a short-term increase in the debt limit. But Carney said Mr. Obama might support a stopgap measure after all, if it allowed time to get a broader deal finished.

JAY CARNEY: What we mean by that is we would not support a short-term extension absent an agreement to a larger deal. That’s not acceptable.

Obviously, if both sides agree to something significant, we will support the measures needed to finalize the details of that.

KWAME HOLMAN: A short-term extension could buy time to finish work on a framework unveiled yesterday by a bipartisan group of six senators. The so-called Gang of Six plan would cut roughly $4 trillion from the deficit over the next decade, beginning with an immediate down payment of $500 billion.

The savings would be achieved through spending reductions, reforms to federal health programs and $1.2 trillion in new revenues from overhauling the tax code. Today, members of both parties were taking the measure of the Gang of Six plan. Democratic Sen. Chuck Schumer of New York said it has promise.

SEN. CHARLES SCHUMER, D-N.Y.: At any time that Democrats and Republicans can come together on something here is a good thing. The fact that Republicans are coming out for revenues is certainly something of a breakthrough. They haven’t done that before. And we hope it shows that they’re willing to compromise.

KWAME HOLMAN: Republican leaders also offered cautious compliments, despite their opposition to higher taxes. House Majority Leader Eric Cantor said the Gang of Six idea of cutting overall tax rates is a positive development.

And New Hampshire’s Charles Bass found the plan worthy of consideration as well.

REP. CHARLES BASS, R-N.H.: I think it’s productive. I think it’s constructive. I think there are a lot of details that we need to find out about. But it solves a lot of problems and it contains the primary components of a framework for a resolution.

KWAME HOLMAN: Other Republicans, such as Ohio’s Jim Jordan, said the party should stick with a plan that passed the House last night calling for a balanced budget amendment to the Constitution. It’s given no chance in the Democratic-controlled Senate.

REP. JIM JORDAN, R-Ohio: Two hundred and thirty-four bipartisan members of the House of Representatives voted in favor of Cut, Cap and Balance. Now we have got some gang of six guys meeting in some backroom giving us the bullet points on some plan, no details.

But what we do — probably can gather from this plan is, it has got big tax increases in it, and all the spending cuts are going to happen in the out-years. Well, how many times do politicians think they can pull that one over on the American people?

KWAME HOLMAN: The split among Republicans made it difficult for party leaders to determine just what might pass the House. Whatever it turns out to be, it still must be acceptable to Senate Democrats and ultimately to the president.

This morning, the Senate’s majority leader, Democrat Harry Reid, challenged House Speaker John Boehner to take matters in hand.

SEN. HARRY REID, D-Nev. majority leader: Right now, I’m at a point where I’m saying we need to hear from the House of Representatives. We have a plan to go forward over here, but until we hear from the House of Representatives, really, our — all of our work here wouldn’t be for naught. So I await the word from the speaker.

KWAME HOLMAN: In the meantime, there’s general agreement that translating the complex Gang of Six plan into legislation and votes before Aug. 2 is likely unrealistic. That could put the short-term emphasis back on a Senate backup plan to let the president raise the debt ceiling on his own, pending some final long-term agreement.