Reid Calls GOP Debt Bill ‘Dead on Arrival’ as White House Threatens Veto

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WHITE HOUSE AND SENATE USING SCARE TACTICS; There will be no debt default.

Published July 26, 2011

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House Speaker John Boehner, center, joined by other GOP leaders, discusses the debt ceiling July 25 on Capitol Hill.

Senate Majority Leader Harry Reid warned Tuesday that Republicans’ deficit-reduction bill is “dead on arrival” in his chamber, as the Obama administration issued a formal veto threat and pushed lawmakers to reach a “compromise.”

White House officials appeared to hold back earlier Tuesday when asked whether President Obama would veto the GOP bill, which could be voted on in the House as early as Wednesday.

But the administration issued what’s known as a “statement of administration policy” Tuesday afternoon saying the president’s advisers “would recommend that he veto this bill” should it clear Congress.

WH adviser Plouffe on debt

While the statement was not quite as tough as the veto threat the administration issued regarding Republicans’ prior deficit-reduction bill, it was no doubt meant to combat suggestions by Republicans that Obama might be open to signing their bill.

“He did not say he’d veto it,” Rep. Kevin McCarthy, R-Calif., said earlier Tuesday, after a closed-door meeting of House Republicans.

House Speaker John Boehner also declared that the plan, which could be on the floor as early as Wednesday and calls for $3 trillion in deficit reduction, can pass both chambers. “I hope the president will consider signing it into law,” he said.

Gene Sperling, head of the president’s National Economic Council, made clear that the White House does not expect to be faced with a veto decision. After the White House praised the Democrats’ approach on Monday, Sperling said Tuesday that both parties’ bills will probably face “stalemate.”

“Neither are likely to pass both houses,” he said. Sperling said negotiators are still “very close to a bipartisan deal.”

White House Press Secretary Jay Carney said afterward that Reid’s bill could potentially pass both chambers “if folks gave it a fair shake,” describing it as a better bill. He said the GOP bill would not pass Congress, adding: “Compromise is the only option.”

He warned of “enormous” consequences if Congress does not raise the debt ceiling by Aug. 2. White House budget director Jack Lew also told Fox News that Aug. 2 is a “very real” deadline. “No one should assume there’s room beyond that,” Lew said.

But House Republican Leader Eric Cantor said Tuesday that, with no formal plan out of the White House, Congress has only three options — miss the Aug. 2 deadline and risk the possibility of default, pass the Democratic plan drafted by Senate Majority Leader Harry Reid or pass the House GOP plan.

Cantor called Reid’s plan a “blank check.” House Republicans have put Boehner’s bill in the shell of a Senate measure to expedite Senate consideration, and plan to consider it in committee Tuesday afternoon.

Moments later, Reid accused Republicans of having “multiple personalities,” claiming his plan incorporates a lot from “the Republican playbook.” He reiterated his opposition to the short-term extension included in the GOP plan.

The tough rhetoric on both sides flew in the face of Obama’s call for a deal in an address to the nation Monday night. The speaker and president sparred in paired addresses over the measures needed to avoid the potential of the U.S. defaulting on its loans.

The one-to-one addresses were unusual, even to the speaker, who said after his speech, “I didn’t sign up for going mano-a-mano with the president of the United States.”

Reid is meanwhile holding back on his bill, keeping it as a “fallback when Boehner’s (bill) fails,” according to a Democratic official. All the while, lawmakers apparently are continuing to hold bipartisan talks — but the separate votes in each chamber are not helping, Senate Republican Whip Jon Kyl told Fox News.

Kyl said the votes serve to further polarize the parties. Indeed, candidates and lawmakers rallied behind their respective party leaders after the Monday night addresses.

House Democratic Leader Nancy Pelosi repeated Obama’s claim that Democrats back a “balanced” approach, saying Boehner’s plan “does not meet this test.”

Republican Rep. Michele Bachmann, a presidential candidate, said that “balanced” approach is just “code for higher taxes and spending.” Bachmann vowed not to raise the debt limit, calling on Congress to simply cut spending.

However, a colossal number of payments — to seniors, veterans and others — could be in jeopardy if Congress does not raise the debt cap in the next week, according to the administration.

Poll numbers suggest Americans would not be forgiving to either party should the current standoff end up harming the already-fragile economic recovery. A new Washington Post-ABC News poll showed about as many people fault GOP policies for the economy as they do the president’s.

The survey showed 65 percent of those polled disapprove of the Republicans’ performance on jobs, while 52 percent feel the same about Obama.

The broad disappointment outside the Beltway could explain why leaders on both sides are calling for a solution.

Boehner has offered a proposal this week that could pass the House and allow Congress to raise the debt ceiling beyond the $14.3 trillion limit authorized by earlier legislation.

The Republican plan aims for about $3 trillion in spending cuts over 10 years, but would split those changes and the debt-cap increase into two parts. Congress would first vote for a debt-ceiling hike of $900 billion along with spending cuts worth slightly more, teeing up Congress for another vote next year only after a 12-member committee finds another $1.8 trillion in deficit savings. The plan would also require both chambers of Congress to vote on a balanced-budget amendment and cap discretionary spending.

Reid has offered an alternative that would cut $2.7 trillion in spending, using budgeting gimmicks that include about $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It would not increase taxes and the debt ceiling hike would be good until approximately 2013.

A group of economists and lawmakers who’ve designated themselves the Committee for a Responsible Federal Budget said at this point — with only a week to meet the deadline — either the Reid or Boehner option is viable, but something needs to be done fast. In either case, the U.S. will likely face a lowering of its credit rating.

“We obviously have to avoid default, but any deal must also reassure markets that policymakers are serious about dealing with our national debt,” said Maya MacGuineas, president of the group.

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