Obama Urges Compromise as Senate Rejects House Debt Plan

With no deal yet on raising the nation’s borrowing limit before August 2, the Senate put to rest the possibility that the House Republicans “cut, cap and balance” plan would pass in that chamber by voting 51 to 46 along party lines to effectively defeat the measure.

The plan would have limited government spending and required a balanced budget amendment to the Constitution in order to raise the debt limit. The plan’s defeat in the Senate, which was expected, made clear to House conservatives that some other proposal would be necessary in order to prevent a default on government debt and a massive shortfall in federal funds.

House Republicans challenged the Senate to come up with their own plan.

“We’ve done our job. The Democrats who run Washington have done nothing. They can’t stop spending the American people’s money. They won’t and they have refused,” House Speaker John Boehner, R-Ohio, said on the House floor after the vote.

“The Senate Majority Leader says that they won’t offer a plan to cut spending. Or a plan to raise the debt limit. Frankly, that’s irresponsible…where is their plan?” Boehner said.

On Friday President Obama called for both Democrats and Republicans to join him in reaching a compromise during a town hall meeting at the University of Maryland. He reiterated his position that any deficit reduction plan had to include some increase in tax revenue, and not just cuts in government spending.

“If we only did it with cuts, if we did not get any revenue to help close this gap between how much is coming in and going out…a lot of ordinary people would get hurt and the country as a whole would be hurt. It doesn’t make any sense,” President Obama told the crowd.

The president said he was willing to compromise, and noted that he was open to cuts to programs that he thought were worthwhile.

The path forward now is not clear. The House and Senate will not vote this weekend, as private negotiations continue, and Obama and Boehner are working on a deal that would reduce the deficit and reform the tax code, among other options.