–Senate Majority Leader Blasts House For Leaving DC This Weekend
–Senate Takes Up House GOP’s ‘Cut, Cap, And Balance’ Plan

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid issued a grim
warning Thursday about the congressional impasse on debt ceiling
legislation, saying Congress appears to be moving “further” from an
agreement as the critical Aug. 2 deadline nears.

In remarks on the Senate floor, Reid said Congress and the White
House now have “days not weeks” to reach an agreement on the debt
ceiling.

He said he has “reached out” to House Speaker John Boehner on the
debt ceiling impasse, but nothing has been resolved.

Reid blasted House Republican leaders for adjourning the House this
weekend, saying this decision paints a “very bad picture” as the nation
nears a serious crisis.

“We are running out of time,” Reid said, adding that “the loudest,
shrillest voices” in the Republican party in the House appearing to be
winning out over those who want an agreement to avert a default.

Meanwhile, in a move that is largely seen as a holding action while
intense negotiations occur behind closed doors, the Senate is debating
Thursday the budget package drafted by House Republicans.

The House passed the GOP’s so-called “Cut, Cap and Balance” bill
Tuesday night on a 234 to 190 vote.

The bill would eventually cap annual federal spending at 19.9% of
gross domestic product by 2021, limit discretionary spending for fiscal
year 2012 at $1.019 trillion, and allow for a $2.4 trillion increase in
the debt ceiling after the House and Senate pass a balanced budget
constitutional amendment.

President Barack Obama has vowed to veto the budget package which
was assembled by conservative House Republicans who claim it would lead
to $6 trillion in budget savings over a decade.

In remarks on the Senate floor Thursday, Minority Leader Mitch
McConnell said it is important for the Senate to take up the House GOP
budget plan, saying it is “an opportunity for everyone to take a stand”
on the package

Senate Democratic leaders have said they are confident it will not
pass the Senate. The Senate will hold a key procedural vote on the plan
Saturday.

Senate Budget Committee Chairman Kent Conrad said the House GOP is
one of the most reckless fiscal measures he has ever seen in Congress,
charging it was “hastily” assembled and is “a half baked concoction of
ideas.”

Even as this debate occurs in the Senate, Reid and McConnell are
exploring a deficit reduction and debt ceiling package.

The current focus of the talks is on a plan McConnell unveiled last
week, which would allow the debt ceiling to be increased in three
tranches of $700 billion, $900 billion and $900 billion over the next
year.

To get these increases in the debt ceiling, the president would
have to introduce spending cut packages of the same size, and Democrats
would have to defeat Republican motions to disapprove of the debt hike.

McConnell’s plan has sparked more interest from the White House and
congressional Democrats than Republicans, but Boehner has not ruled out
taking up some version of the McConnell plan.

McConnell is working with Reid on revisions to his package. These
might include attaching up to $1.5 trillion in spending cuts to the plan
as well as creating a new congressional panel that would be charged to
submit a deficit reduction plan later in the year that would be voted on
by the House and Senate.

A new twist to the fiscal debate occurred earlier this week with
the release of a budget by the so-called “Gang of Six.”

The “Gang Of Six” plan was developed by three Democratic and three
Republican senators and would cut deficits by $3.75 trillion over a
decade. Their plan would include large savings from entitlement programs
and increase revenues by about $1.2 trillion.

President Obama said Tuesday the “Gang of Six” budget is “broadly
consistent” with the fiscal approach he supports.

Reid and McConnell both said they are reviewing the plan, but both
have been very cool to the workings of this informal group of senators

Reid has said “elements” of the “Gang of Six” budget could be
“incorporated” into the package he and McConnell are drafting.

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

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