As the final deadline gets closer, the parties move further apart

David Usborne,Us Editor
Saturday 22 October 2011 22:26

High anxiety over a possible default by the United States on its mountainous debt was undiminished last night, amid further wrangling on Capitol Hill on a possible way out of the crisis, with Republicans still pitted against Democrats and even against each other.

The US Treasury slapped down market hopes that there could be leeway in its 2 August deadline, when it says that tax receipts will no longer be sufficient to cover expenditures and it will have to stop paying some bills, or even interest on the national debt. The country will be "running on fumes" after next Tuesday, White House spokesman Jay Carney said.

In a closed-door meeting withparty members, the Republican House Speaker, John Boehner, pleaded for party solidarity, saying he needed an "army" behind him as he faced further negotiations with Democrats in both chambers and with the White House. Aides indicated that more Republicans would fall in line with Mr Boehner's own blueprint to end the crisis and suggested that a vote in the House that had been put off from yesterday could come as early as today.

The delay in the vote, announced late on Tuesday, highlighted the difficulties Mr Boehner has been facing because of a rebellion from the Tea Party faction of his party, which has been reluctant to support his own plan for ending the stand-off, calling it insufficient. Even if Mr Boehner could muster enough Republican votes for his plan, there is little hope of it winning approval in the Democrat-controlled Senate. Aware that all paths to a deal on Capitol Hill remained strewn with obstacles, the White House said it was crafting its own version that would incorporate elements both of the Boehner plan and of a competing plan by Senator Harry Reid, leader of the Democrat majority in the upper chamber. "We're working on a Plan B," Mr Carney said.

Matters for Mr Boehner were made worse late Tuesday when the non-partisan Congressional Budget Office determined that his plan initially to cut $1.2 trillion (£731bn) in spending over 10 years while raising the debt limit by a first tranche of $900bn, would in reality trim only $850bn from spending projections. That stiffened opposition to it by radical conservatives.

The CBO similarly found that the Reid plan was overstating its own potential for cutting the deficit by about $500bn, and would cut just $2.2trn from the country's deficit.

In the wake of the CBO analysis, aides to Mr Boehner were last night scrambling to rewrite parts of his plan to ensure that the cuts it would deliver would outstrip the amount by which the debt ceiling would be raised. A spokesman promised to keep the "no tax rises" pledge.

The White House meanwhile has served notice that even if the Boehner plan were to pass Congress it would face a veto from President Barack Obama, because it represents only a start to the process that would inevitably require further negotiations on a longer-term solution next year, when the President will be in the throes of seeking re-election.

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