WASHINGTON — Crisis concerns rising, House Republican leaders shrugged off a White House veto threat and an outbreak of tensions within their own party Wednesday as they built support for legislation to stave off the government default threatened for next week. Worried Wall Street sent stocks plunging on fears that political gridlock would prevail.
“I can’t do this job unless you’re behind me,” House Speaker John Boehner bluntly told his fractious rank and file in the run-up to a scheduled Thursday vote on the bill, which was hastily rewritten to show deeper spending cuts than 24 hours earlier.
With Boehner facing a major test of his leadership, the White House disparaged the measure he was working so hard to pass. Sen. Harry Reid of Nevada called it “a big wet kiss for the right wing,” and all 51 Senate Democrats and two independents pledged to scuttle it if it cleared the House.
The White House has threatened a veto, saying the bill does not meet President Barack Obama’s demand for an increase in the debt limit large enough to prevent a rerun of the current crisis next year, in the heat of the 2012 election campaign.
Instead, Obama supports an alternative drafted by Reid that also cuts spending, yet provides enough additional borrowing authority to tide the government over through next year.
For all the bluster, there were hints that a compromise might be near.
“Magic things can happen here in Congress in a very short period of time under the right circumstances,” said Reid, the Senate majority leader.
Without legislation in place by Aug. 2, administration officials say the Treasury will not be able to pay all the nation’s bills, possibly triggering a default that could prove catastrophic for an economy still recovering from the worst recession in decades.
Two days after Obama and Boehner made unprecedented back-to-back speeches on national television, there was evidence that the debt crisis was becoming a national cause of concern.
Shawn Bonner of Boerne, Texas, said, “I don’t think the people who are making the decisions live in the same environment we do.” She said of the two sides: “They’ve both dug in their heels for political statements, and we need them to make decisions to help the country.” She was in Tennessee, touring the State Capitol.
The U.S. financial markets posted big losses for the day as political leaders maneuvered. The Dow Jones industrial average fell nearly 200 points and appeared headed for its worst week in nearly a year.
“Confidence in our political system is beginning to fade.” said Channing Smith, managing director of Capital Advisors Inc. “As hours pass and the uncertainty builds, I think the market is starting to price in the potential that we might not have a solution by Aug. 2.”
In Washington, across from the Capitol, a few dozen Tea Party activists rallied — and appeared as divided as the conservatives in the House. Some issued an online call for Boehner to resign as speaker, while others said he deserved time to try and strike the best deal possible.
The Republican legislation underwent revisions to increase its prospects of passage.
That meant changes that brought projected savings for 2012 to $22 billion, part of a 10-year cut of $917 billion in all that would trigger a $900 billion increase in the debt limit. The bill also would establish a special committee of lawmakers to recommend additional cuts that would trigger additional borrowing authority if approved.
While the two parties’ bills differed in key details, they also shared similarities that underscored the concessions made by both sides in recent days. Reid’s bill does not envision a tax increase to reduce deficits, a bow to Republicans. But neither does the House measure require both houses to approve a constitutional balanced budget amendment for state ratification, a step in the direction of Obama and the Democrats.
For Boehner, the House vote shaped up as a critical test of his ability to lead a majority that includes 87 first-term lawmakers, many of them elected with Tea Party support. Passage was also imperative to maximize the leadership’s leverage with Obama and Reid in a fast-approaching endgame.
The speaker was direct in the meeting with rank-and-file GOP lawmakers on Wednesday. “Get your ass in line,” he told them. “I can’t do this job unless you’re behind me.”
If House conservatives torpedo the bill, any follow-up would probably require Democratic votes to pass. That, in turn, would mean smaller spending cuts than Republicans are seeking in exchange for raising the nation’s $14.3 trillion debt limit.
As Thursday’s vote approached, some Republicans seemed to be swinging behind the legislation, however reluctantly.
“Rep. Bill Huizenga, a first-term lawmaker from Michigan, said he was undecided how to vote, but he added, “This is about as good as it’s going to get. That’s a pretty strong argument.”
“Nancy Pelosi, Harry Reid and President Obama are going to be surprised tomorrow night,” said Rep. Allen West, a Florida first-term Republican. “I’ll bet my retirement check on it. I’m a conservative. I’m going to support this.”
Republicans control 240 seats in the House, compared with 193 for the Democrats, and there was strong opposition from some conservatives.
“I don’t know where the votes are today,” said Rep. Jim Jordan, R-Ohio, a leader of the Republican Study Committee, an organization of conservative Republican lawmakers who often have disagreed with the leadership. “I just know that I am against the bill.”
Across the Capitol, Reid played a waiting game, scheduling no votes until Boehner could show he could prevail in the House.
The White House rejected one proposed way out of the crisis.
Democratic Rep. Jim Clyburn suggested the president unilaterally raise the debt limit, citing a clause in the 14th Amendment to the Constitution that says the validity of the nation’s public debt “shall not be questioned.”
Obama said several days ago he had consulted with White House lawyers on that point and they were unenthusiastic about the idea.
Lawmakers generally have been assuming they would need to approve an additional $2.4 trillion in borrowing authority to make sure the Treasury could handle the nation’s finances beyond the 2012 elections.
Yet a $2.2 trillion increase would suffice, based on assumptions in a letter that Treasury Secretary Timothy Geithner sent to Congress in April. He wrote that the country’s borrowing was increasing by an average of $125 billion a month. Additionally, the government must repay the $237 billion cost of the extraordinary measures it has been taking since May 16 to avoid breaching the $14.3 trillion debt limit.