It’s best to avoid categorical assessments about the debt-ceiling process — conditions can change quickly — but with exactly two weeks before the nation can no longer pay its bills, we know a couple of things.
First, we know the House will waste a day on the “Cut, Cap, and Balance Act,” which would take a chainsaw to public investments and entitlement programs. Whether it passes the chamber or not doesn’t much matter — the plan can’t overcome White House and Senate opposition — since the day’s exercise is about making right-wing Republican lawmakers feel better about themselves. Complicating matters slightly, the “Cut, Cap, and Balance Act” is so extreme, House passage isn’t even assured (and vulnerable GOP incumbents have to know Dems will exploit this radicalism in 2012 attack ads).
Second, we also know that in the Senate, “Plan B” is now “Plan A.”
Publicly, House Speaker John Boehner (R-Ohio) and Senate Republican leader Mitch McConnell (Ky.) have made votes on the Cut, Cap and Balance Act and a balanced-budget amendment their priority this week.
But GOP aides say the leaders are already looking past those votes to a potential deal with Democrats to raise the debt limit before an Aug. 2 deadline and spare Republican lawmakers from a political backlash.
“McConnell is going to let cut, cap and balance have its vote and then immediately move to plan B,” said a GOP aide in reference to the fallback debt plan McConnell is negotiating with Senate Majority Leader Harry Reid (D-Nev.).
Another Republican aide said McConnell’s contingency plan “has become plan A.”
The 10-person, bipartisan talks were focused on reaching some kind of larger agreement, with President Obama presenting lawmakers with a choice of several debt-reduction plans. As of this morning, it appears all of those competing options are dead — each involved Republicans accepting at least some new revenue, which they refuse to do — leaving senators to iron out the details on the McConnell/Reid compromise.
As for what’s in that agreement, specific provisions are still coming together, but it appears to cut $1.5 trillion over 10 years, which would include defense spending, but leave entitlements alone. This deal would also create a 12-member, bipartisan committee, made up entirely of members of Congress, to work on a larger debt-reduction plan for the rest of the year, and with the understanding that if the panel comes up with a proposal, it would be fast-tracked in both chambers.
The McConnell/Reid plan would also, of course, set up the byzantine process that empowers the White House to raise the debt ceiling on its own.
Because Plan B would not include any new revenue, it remains to be seen what enticements could be added to make the proposal more appealing to House Democrats, whose support will be necessary for final passage. Rumored possibilities continue to include an extension of unemployment benefits and/or a payroll tax cut.
While that process continues, it’s still important for the political world to keep an eye on the calendar. If the “Cut, Cap, and Balance Act” passes the House, it will be considered and defeated in the Senate. If all goes according to plan, the details of McConnell/Reid will be presented later this week, starting the clock. This will initiate a series of Republican filibusters, which once exhausted, will clear the way for a Senate floor vote by July 29 — a week from Friday — leaving the radicalized House just four days to debate and pass the emergency measure before the Aug. 2 deadline.
In the meantime, Wall Street, which has long assumed that this entire charade was pointless posturing, is beginning to wonder if Republicans really are crazy. The longer this takes, and the right-wing members saber-rattle, the greater the likelihood of the markets panicking.
