–Debt Ceiling Endgame Could Begin When House OKs Boehner Plan Thursday
–Senate Dems Likely To Press For Votes On Boehner, Reid Plans
–Experts Say It’s Technically Easy, Politically Hard To Merge Two Plans

By John Shaw

WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad, in
a moment of understatement which is increasingly rare in hyperpartisan
Washington, said Wednesday that he does not know the “precise roadmap”
leading to passage of legislation to increase the debt ceiling and cut
budget deficits.

Lawmakers from both parties, speaking less carefully, have said
they have absolutely no idea how the current debt ceiling stalemate will
play out.

But it’s possible to make a few educated guesses about how this
politically volatile standoff might be resolved.

By all accounts, the debt ceiling endgame will begin when House
Speaker John Boehner manages to pass a new House Republican debt ceiling
plan.

Boehner’s plan, which is being revised to beef-up cost savings and
assuage the concerns of conservative Republicans, is likely to pass the
House Thursday. The final House vote is likely to be on an almost
completely party-line vote. Boehner has all but staked his speakership
in passing the plan in the House to give him leverage in what may be the
final days of the debt ceiling talks

At that point, Boehner’s budget would be sent to the Senate.

Senate Majority Leader Harry Reid said Wednesday he is fully
confident that all 53 Senate Democrats are ready and eager to vote
against Boehner’s plan.

But it’s unclear if Senate Minority Leader Mitch McConnell will use
procedural motions to deny direct up-or-down votes on the Boehner and
Reid plans. McConnell almost certainly fears that Democrats would use
their majorities in the Senate to defeat the Boehner plan and approve
the Reid package.

But even if there are no Senate votes, it seems likely that at this
point, probably Thursday evening, intense talks will resume between
either Reid and Boehner or President Obama and Boehner. It’s unclear if
other congressional leaders will also be part of these talks.

These discussions are likely to extend into the coming weekend, as
the August 2 deadline draws dangerously near.

As Market News International reported Monday evening, despite the
sharply partisan rhetoric enveloping the debate on the debt ceiling, the
differences between the Boehner and Reid plans are not that huge and
could be resolved relatively easily — if both parties want to resolve
their differences.

Boehner has proposed a two-step debt ceiling increase that would
raise the debt ceiling by $1 trillion this year and $1.6 trillion next
year.

Under Boehner’s approach, passing the initial $1 trillion debt
ceiling increase would require Congress to pass $1.2 trillion in
spending cuts through imposing caps on discretionary spending.

Approval of the second tranche of $1.6 trillion would require
passage of $1.8 trillion in spending cuts in entitlement programs that
are identified by a special congressional panel.

Under Boehner’s plan, the House and Senate would also have to vote
on a balanced budget constitutional amendment between this October and
the end of the year.

Reid on the other hand has proposed a debt ceiling bill that would
cut spending by $2.7 trillion over ten years and allow for passage by
Aug. 2 of a $2.4 trillion debt ceiling increase.

Reid’s plan calls for $1.2 trillion in discretionary savings, $1
trillion from winding down the wars in Iraq and Afghanistan, $400
billion in interest savings and $100 billion in entitlement savings.

Despite all the fierce rhetoric, the two parties now agree that
passing the debt ceiling will require a deficit reduction package that
is made up only of spending cuts and those cuts must exceed $2.4
trillion.

Boehner’s call for a House and Senate vote on a balanced budget
amendment is something that Democrats can live with. They are confident
it will not get the requisite two-thirds majorities in the House and
Senate to pass and be sent to the states for ratification.

The two central issues that need to be resolved are the specifics
of the spending cut package and if the debt ceiling will be increased in
one installment this summer or by the two step process that Boehner is
proposing.

Passing any debt limit agreement in the House and Senate will
require the kind of bipartisan vote that has been very, very rare in
this Congress.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Tim Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2.

** Market News International Washington Bureau: (202) 371-2121 **

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