THE MORNING LINE -- July 25, 2011 at 8:36 AM EDT
No Debt Deal in Sight as Leaders Propose Rival Plans
House Speaker John Boehner, R-Ohio, arrives at the Capitol on Sunday. Photo by Win McNamee/Getty Images.
Congressional leaders and President Obama aren't closer to a deal on raising the debt limit Monday morning after talks collapsed late Friday and party leaders met throughout the weekend to find a way to avoid a government default.
Although the deadline for reaching a deal is Aug. 2, Congress must introduce legislation and pass it in both chambers before President Obama can sign it. That process will take several days. With time running out, the House and Senate are drafting separate backup plans.
The Washington Post's Lori Montgomery has the details on the competing plans: House Speaker John Boehner wants a deal that would raise the debt ceiling in two stages. Senate Majority Leader Harry Reid rejected that approach and plans to introduce a plan in the Senate that cuts $2.7 trillion from the deficit over ten years and does not raise taxes -- a key Republican demand.
In a statement released after a meeting at the White House with President Obama and House Minority Leader Nancy Pelosi, D-Calif., Sen. Reid made clear that Democrats would not support a short-term extension.
"Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support," Sen. Reid, D-Nev., said. "A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President."
Rep. Boehner, R-Ohio, accused President Obama of rejecting the two-step process because he was worried about the effect the debate would have on his presidential re-election prospects.
"I know the president's worried about his next election. But my God, shouldn't we be worried about the country?" Speaker Boehner said on Fox News Sunday.
Rep. Boehner's plan would form a committee of House and Senate members who would find $1.6 trillion in cuts by this winter, while an immediate increase in the debt ceiling by $900 billion would be paired with $1.2 trillion in cuts over the next decade, POLITICO's David Rogers reports.
Sen. Reid might rely on counting the end to the wars in Iraq and Afghanistan as part of the savings, Montgomery reports:
"Counting money not spent on wars that the nation is already planning to end is widely viewed as a budget gimmick, and House GOP leaders have been reluctant to include it as savings. But it has a political advantage because it was included in the budget blueprint House Republicans adopted this spring. And Democratic sources said the option may look more attractive as the clock ticks down to Aug. 2, when Treasury officials say they will run out of money to pay all of the government's bills."
Another factor in the equation will be the financial market's reaction to the impasse. If a solution before Aug. 2 looks less and less likely, a market crash could spur all sides to reach a compromise quickly.
Treasury Secretary Timothy Geithner said on Fox News Sunday that he didn't think the impasse would last this long.
"We started this process seven months ago," he said "Here we are seven months later, we're running out of runway. We're almost at the edge. I never thought they would take this close to the edge and let politics get in a way of demonstrating -- well, will we pay our bills on time?"
BACHMANN VS. PAWLENTY
For the past two weeks, Rep. Michele Bachmann, R-Minn., had been deflecting verbal jabs at her record from Tim Pawlenty, saying she wanted to focus on her accomplishments "instead of negativity."
That all came to an end Sunday when Bachmann slammed Pawlenty, comparing his record to that of President Obama.
"[T]here is very little difference between Governor Pawlenty's past positions and Barack Obama's positions on several critical issues facing Americans," Bachmann campaign press secretary Alice Stewart said in a statement.
"On issues such as unconstitutional healthcare mandates, climate change regulations, and Wall Street bailouts, there's very little daylight, indeed, between Gov. Pawlenty's record and the Obama administration's policies," Stewart added.
The statement came after Pawlenty took yet another swipe at Bachmann's resume during an interview that aired Sunday on CNN.
"These are really serious times and there hasn't been somebody who went [directly] from the U.S. House of Representatives to the presidency, I think, in over a hundred years, and there's a reason for that," Pawlenty said.
Pawlenty initiated that line of attack two weeks ago on NBC's "Meet the Press," calling Bachmann's record of accomplishment in Congress "non-existent."
Bachmann's campaign responded Sunday that Pawlenty's executive experience was not worth touting.
"Governor Pawlenty has changed his positions in recent years, but he can't run from his big government record as governor of Minnesota that left the state's budget in a multi-billion dollar mess. That's not executive experience we need," Stewart said.
Pawlenty spokesman Alex Conant fired back with a statement of his own:
"The truth is that there is very little difference between Gov. Pawlenty and Congresswoman Bachmann on their issue positions. The difference is that when Gov. Pawlenty was scoring conservative victories to cut spending, pass market-based health care reform, and transform a supreme court from liberal to conservative, and was elected twice in a very blue state, Congresswoman Bachmann was giving speeches and offering failed amendments, all while struggling mightily to hold onto the most Republican house seat in the state."
With just a few weeks until the Iowa GOP Straw Poll, an early test of electoral strength in the first-in-the-nation caucus state, Pawlenty is clearly trying to blunt Bachmann's early momentum. He's also looking to demonstrate he has the toughness to challenge his Republican competitors after backing down from his criticism of Mitt Romney's Massachusetts health care plan during the last GOP debate in New Hampshire.
With the next GOP presidential debate scheduled for Aug. 11 in Iowa, just two days ahead of the Straw Poll, it's a safe bet that Pawlenty will not shy away from going on the offensive, and now it appears Bachmann will be just as willing to respond.
ABOUT THAT STRAW POLL...
Speaking of the Iowa Straw Poll, the official ballot will have nine names on it, but attendees will be able to vote for anyone they like thanks to the inclusion of a write-in line.
Six candidates were guaranteed a place on the ballot because they purchased tent space at the Straw Poll set for Aug. 13 in Ames: Bachmann, Pawlenty, former Godfather's Pizza chief executive Herman Cain, Michigan Rep. Thaddeus McCotter, Texas Rep. Ron Paul and former Pennsylvania Sen. Rick Santorum.
The Republican Party of Iowa's state central committee also decided over the weekend to include three candidates who have said they will not participate in the event: Romney, former Utah Gov. Jon Huntsman and former House Speaker Newt Gingrich.
The committee voted to leave Texas Gov. Rick Perry and 2008 vice presidential nominee Sarah Palin off the ballot since both have only hinted at possible runs.
POLITICO's Jonathan Martin, meanwhile, takes the long-view and suggests the Iowa caucuses have "all the makings of a volatile, potentially even chaotic, multi-candidate affair -- exactly the kind of presidential primary the GOP is unaccustomed to."
"Unlike the 2000 caucuses, which boiled down to George W. Bush and an array of candidates jockeying to get to his right or the 2008 Iowa GOP campaign--where the race was destined to come down to Romney and an alternative--next year's contest has no such clarity.
"If anything, the Iowa Republican contest of 2012 bears an uncanny resemblance to the 2004 Democratic contest here, with multiple candidates competing for different slices of the party vote and uncertainty likely to hang over the race well after the first frost has emerged on the corn stalks."
Democrats have a new sex scandal on their hands: Oregon Rep. David Wu has been accused of an "unwanted sexual encounter" by the teenage daughter of one of his campaign donors, the Oregonian newspaper reported.
Wu indicated he won't run for re-election but is refusing to step down. POLITICO's John Bresnahan and Jonathan Allen report:
"Democratic insiders said Pelosi and her top lieutenants have made it clear to Wu "that he has no support" from his colleagues or party leaders and that they would like to see him leave the House as soon as possible. Coming so soon after the embarrassing episode that led to the resignation of Rep. Anthony Weiner of New York last month, the last thing Democrats need is another sex scandal on their plate as they try to solve the nation's debt-ceiling crisis."
Rep. Pelosi has called on the the House Ethics Committee to investigate. Democratic Congressional Campaign Committee chairman Rep. Steve Israel, D-N.Y, echoed Pelosi's call.
"New allegations of unacceptable behavior by Congressman Wu are extremely serious and disturbing. I strongly agree with Leader Pelosi's request that the House Ethics Committee use its authority to begin an immediate investigation," Rep. Israel said.
Wu faced calls to resign after news broke early this year that he displayed erratic behavior during the 2010 campaign, driving many of his staff to quit.
"Two Portland newspapers, The Oregonian and Willamette Week, both reported Friday that several members of Wu's staff said the 55-year-old was increasingly unpredictable on the campaign trial and in private last fall, and had several angry and loud outbursts.
"The newspapers reported that campaign staffers were appalled by a series of e-mails sent from Wu's federally issued BlackBerry that included the photo of him in the tiger costume. But more disturbing, staffers said, were e-mails written in the voice of his adolescent children."
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