–House Speaker Determined To Push Debt Hike In Two Increments
–Rep Boehner Wants $900B Debt Hike Now, $1.6T Later W/Offsetting Cuts
–Sen. Reid: Crafting Proposal to Hike Debt By $2.5 Trillion Now
–White House, Hill Dems Say Short-Term Debt Hike Is Unacceptable
–Obama Meets Sunday Evening With Sen. Reid, Rep. Pelosi
–House Speaker Boehner Tells House GOP That Some Compromise Is Needed

By John Shaw

WASHINGTON (MNI) – The desire of the White House and Congressional
leaders to find a solution to the impasse over deficit reduction and
debt ceiling legislation this weekend seems doomed, but some new ideas
have emerged over that could allow for a resolution in the coming days.

House Speaker John Boehner continues to press for a two phase debt
ceiling hike, with the first installment being a $900 billion increase
in the debt ceiling that would be approved before Aug. 2 and a second
hike of about $1.6 trillion occurring early next year.

Boehner is demanding that each debt ceiling increase be accompanied
by spending cuts of equal or greater size.

In a conference call Sunday afternoon to House Republicans, Boehner
urged his colleagues to stay united but also to prepare for some
compromise because any legislation must pass the Democratic controlled
Senate.

The White House and Democrats seem determined to avoid two votes to
increase the debt ceiling before the November 2012 elections, arguing
that next year’s debt hike battle would be even more protracted and
confidence-sapping as this year’s battle has been.

President Obama met with Senate Majority Leader Harry Reid and
House Minority Leader Nancy Pelosi Sunday evening and in a brief
statement the White House said only that the Democratic leaders
reaffirmed their opposition to a short-term debt ceiling increase.

That point was made repeatedly and emphatically by Treasury
Secretary Timothy Geithner Sunday morning as he appeared on three Sunday
news shows. Geithner said any debt limit accord must increase the debt
ceiling beyond 2012.

Geithner said that from the administration’s perspective there are
two options in play: a comprehensive spending cut and revenue increase
package, the so-called Grand Bargain, or a plan along the lines of that
devised by Senate Minority Leader Mitch McConnell which raises the debt
ceiling by $2.5 trillion.

Reid appears to be working on his own package to raise the debt
ceiling by $2.5 trillion with spending cuts of the same size.

Staffers have said he may propose doing so without overhauling
entitlements. Reid is likely to propose securing more than $1 trillion
from unspecified savings in discretionary programs and claiming large
savings from the winding down of the wars in Afghanistan and Iraq. These
savings have also been used in Republican budget plans but the GOP has
also urged substantial savings in entitlement programs.

It now seems likely that a course of action on the debt ceiling
will be decided Monday, but so far every informal deadline that has been
made has been missed.

The U.S. has already reached its $14.29 trillion debt ceiling.
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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