The Wall Street Journal
By: Naftali Bendavid & Carol E. Lee
July 29, 2011
The House postponed a Thursday night vote on Speaker John Boehner's plan to raise the federal borrowing limit after he failed to stem a revolt by conservative GOP members. The delay leaves the credit status of the U.S. government in jeopardy with five days remaining before it begins running out of money to pay all its bills.
The development came after a two-hour debate on the bill was abruptly ended earlier in the evening. Mr. Boehner, knowing that a rejection could undermine his speakership, then joined other House GOP leaders in trying to pressure party members to reconsider their opposition.
Those efforts fell short and it wasn't clear if the vote would be rescheduled. But the development appeared to hand the initiative for the moment to Senate Majority Leader Harry Reid (D., Nev.), who is pushing an alternative version of the debt bill.
House Republicans and Senate Democrats planned to meet Friday morning at 10 a.m. to plan strategy. Republicans will figure out whether, and how, they can move forward.
"I think what's going on now is a process of dialogue among legislators who are listening to one another and deciding how it's going to be possible for us to move forward within the democratic process," said Rep. Mike Pence (R., Ind.).
Mr. Pence acknowledged that "we're not there yet" in terms of votes for the Boehner plan, but "Our objectives remain the same."
Sen. Richard Durbin (D., Ill.) said the delay was unfortunate but a deal could still be struck. "We're running out of time and options, but if there's an agreement, a real agreement, things can move quickly in the Senate and the House," Mr. Durbin said.
The debt crisis has arisen because most Republicans and some Democrats are refusing to support a debt-limit increase unless it is linked to sweeping deficit cuts. But they can't agree on the nature or scope of those cuts--and that leaves them in a staring contest, each insisting the other must blink first.
The vote, scheduled for 6 p.m., was delayed when it appeared Mr. Boehner didn't have the votes. A series of lawmakers who had said they would oppose the Boehner plan were summoned to the speaker's office as he attempted to persuade them to change their minds, creating an unusually stark scene of power politics.
But most emerged saying they were still "no" votes. "He's asking for my vote. I'm still where I was," said Rep. Louie Gohmert (R., Texas). "The speaker was very respectful."
Rep. Joe Walsh (R., Ill.) added, "I'm still a no."
A trio of South Carolina Republicans, Reps. Jeff Duncan, Mick Mulvaney and Tim Scott, said they were going to consult a spiritual authority in the congressional prayer room. "At the end of the day, when you need divine inspiration, you go to the divine source," said Mr. Scott, who was listening to Christian music on his iPad as he entered.
But, he added, "I think divine inspiration already happened. I was a lean no. Now I'm a no."
House leaders had hoped to send Mr. Boehner's bill to the Senate as their final offer, handing the Senate the choice of passing it or inviting default after Tuesday. That's the day the Treasury Department says the U.S. could begin running out of cash to pay all its bills if the $14.29 trillion debt limit isn't raised.
Senate leaders retorted that Mr. Boehner's bill would be dead on arrival in the Senate even if it did pass the House, shelved by a procedural measure that required only 51 votes. They planned to hold an initial vote Saturday on an alternative plan by Mr. Reid. But it, too, faced the challenge of winning the 60 votes it would need to pass the Senate.
While both sides issued ultimatums, they also continued back-channel efforts toward a compromise. Senate Minority Leader Mitch McConnell (R., Ky.) was talking with Vice President Joe Biden about ways out of the stalemate, Democratic aides said. Mr. McConnell's office downplayed the conversations.
The House conservatives' opposition to Mr. Boehner's bill suggests any final compromise deal will need Democratic votes to pass the chamber.
Before the debate started in the House, close to 20 Republicans said they would defect despite Mr. Boehner's entreaties, while at most a handful of Democrats were expected to support the plan.
Rep. Louie Gohmert (R., Texas) voiced the feelings of many conservatives when he complained that Mr. Boehner's deficit cuts of $917 billion over 10 years were inadequate. "If we can keep that pace up for 150 years, we will balance the budget," Mr. Gohmert said.
But many other Republicans concluded that despite their misgivings, they needed to put Mr. Boehner in the strongest possible position as he enters endgame negotiations with President Barack Obama and Mr. Reid. "We want to make sure that he's strong," said Rep. Walter Jones (R., N.C.). "And we cannot come to agreement unless our leader is sitting at the table with cards in his hands."
The White House isn't sure whether the two sides will agree by Tuesday and is betting the House Republicans will compromise in the end, according to Democratic officials familiar with the matter.
The Obama administration believes Senate Republicans, particularly Mr. McConnell, will be crucial to persuading House Republicans to a final deal.
Under Mr. Boehner's plan, the debt ceiling would immediately rise by $900 billion, accompanied by the $917 billion in spending cuts. Then a special committee of lawmakers would recommend further cuts of $1.8 trillion in the next decade; if they were adopted, the debt ceiling could go up another $1.6 trillion.
Mr. Reid wants to raise the debt ceiling by at least $2.4 trillion--so it would not have to be raised again until after next year's election--while cutting spending by $2.2 trillion over the next 10 years. His plan also calls for a congressional committee to find ways to reach that deficit-reduction goal.
The major stumbling block is House Republicans' insistence on another debt-ceiling vote early next year. Democrats reject that idea, contending it would prolong economic uncertainty and spook the markets in a presidential election year.
Mr. Obama's primary concern is the negative impact a short-term debt limit increase would have on the economy. But he is also reluctant to establish the precedent that every time the debt ceiling is raised, the president must address various congressional demands.
Democrats are counting on Mr. Obama to use the presidential megaphone to send the message that they have compromised, agreeing to deep spending cuts without getting any of the tax increases they sought, while Republicans are being reckless and intransigent.
"Everyone will have to answer to his or her constituents about what they did," said White House spokesman Jay Carney. "Where were they when decisions were made about whether or not to allow the United States to default?"
Underlining the growing urgency, more than a dozen top executives of the nation's largest financial services firms sent a letter Thursday urging lawmakers and the president to settle.
"A default on our nation's obligations, or a downgrade of America's credit rating, would be a tremendous blow to business and investor confidence," the letter said.
Signers included Bank of America Corp. CEO Brian Moynihan; Goldman Sachs Chairman and CEO Lloyd Blankfein; and J.P. Morgan Chase & Co. CEO James Dimon.
All three major credit rating agencies have warned they may lower their top-notch ratings of U.S. government debt if the borrowing cap isn't raised.
Moody's Investors Service said Thursday it might also downgrade the debt of 162 local governments, reflecting the trickle-down impact of the approaching deadline.
Mr. Reid has signaled that if the Boehner bill isn't resurrected, he would push ahead with a compromise bill that he hoped could pass with bipartisan support at the last moment, forcing the House to choose between accepting it or accepting the blame for default.
--Corey Boles, Kristina Peterson, Patrick O'Connor, Victoria McGrane and Sara Murray contributed to this article.
Write to Naftali Bendavid at firstname.lastname@example.org