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July 29th, 2011
09:02 PM ET

Senate Democrats block Boehner debt ceiling plan after House approval

Washington (CNN) - Speaker John Boehner's plan to raise the nation's the debt ceiling and slash government spending narrowly passed the House on Friday and then was blocked by Senate Democrats, setting up a weekend of negotiations to seek a deal that would avoid a potential federal default next week.

The Senate vote was 59-41 to table the measure, which effectively kills it unless Democrats decide to bring it up again.

Earlier, Boehner's proposal was approved by the House in a sharply polarized 218-210 vote that was delayed by a day while the speaker rounded up support from wary tea party conservatives. No Democrats supported the measure, and 22 of the 240 members of the Republican majority also opposed it.

Even though it was blocked in the Senate, the Boehner plan now is the Republican negotiating position for hammering out a deal with congressional Democrats and President Barack Obama to avert a possible government default next week.

Friday's House vote was a critical test of Boehner's control over his tea party-infused GOP caucus. The speaker was forced to quell a right-wing revolt over the measure after a number of members complained that it doesn't do enough to shrink the size of government and stem the tide of Washington's red ink.

Boehner, R-Ohio, managed to sway several of those members by including a provision requiring congressional passage of a balanced budget amendment to the Constitution before the debt ceiling can be extended through the end of 2012.

In his floor speech before the vote, Boehner called the proposal imperfect but necessary, and he criticized Obama and congressional Democrats for rejecting all deficit reduction measures passed by the House so far.

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July 28th, 2011
08:32 PM ET

House vote on GOP debt plan delayed

Washington (CNN) - House Republicans delayed a vote Thursday on Speaker John Boehner's plan to raise the nation's debt ceiling while enacting sweeping cuts in government spending, indicating a rift within the GOP could undermine the party's latest attempt to avoid an unprecedented national default and stave off potential economic catastrophe.

The delay showed Boehner was unable to muster sufficient support from his own caucus to guarantee his proposal would pass in the face of expected unified Democratic opposition.

It was unclear if the vote would occur on Thursday night. Influential House Budget Committee Chairman Paul Ryan, R-Wisconsin, said he expected the Boehner plan to eventually pass, but when asked about timing, answered: "I don't know the answer to that question."

"There is a delay. The reason has not been stated," Rep. Nan Hayworth, R-New York, who supports the plan, told CNN. Hayworth acknowledged that some members "have had a lot of deep thinking to do" about their votes, and said the delay might be to confirm "the last few" supporting votes.

After the announcement of the delay, conservative congressmen were seen entering and leaving Boehner's office as the speaker tried to generate the necessary support. A floor debate on the plan was cut short, and the House moved on to discuss the naming of a post office in Illinois.

Staff members were later seen carrying pizzas from a local restaurant into Boehner's office.

Defeat would be a major setback for Boehner, who assumed his post in January, and further muddy the already tense negotiations over a deficit reduction deal that would also increase the federal borrowing limit. In particular, it would show Boehner was unable to control the tea party conservatives elected last year in a Republican wave that delivered a GOP majority in the House and his ascension to speaker.

Earlier, Boehner declared to reporters that the measure would pass, but Majority Whip Kevin McCarthy, R-California, only would say progress was being made in rounding up the votes.

Another speaker at the news conference, Republican Rep. Renee Ellmers of North Carolina, let slip there's more work to be done, calling on House colleagues "who may not be there yet" but were "moving forward on those votes."

The vote in the House had been scheduled for roughly 6 p.m. ET. Few if any Democrats were expected to back the measure. Assuming House Democrats remain united against the bill, Boehner will need the support of at least 216 of the House's 240 Republicans.

Whether Boehner can push the measure through remains an open question. Tea party-backed conservatives staged a virtual revolt against the bill over the past two days, complaining that it doesn't do enough to shrink the size of government and stem the tide of Washington's red ink.

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July 27th, 2011
09:20 PM ET

House vote on Republican debt plan set for Thursday

Washington (CNN) - Competing Democratic and Republican plans to reduce federal deficits and raise the debt ceiling were subjected to a fresh round of criticism Wednesday, as signs of disarray emerged in a House Republican caucus split between unhappy conservatives and a leadership struggling to maintain party unity.

"Get your ass in line," House Speaker John Boehner told his fellow Republicans in the face of divisive infighting over his latest proposal, two GOP sources who attended a Wednesday morning meeting told CNN on condition of not being identified.

The House scheduled a vote on the plan for Thursday in what will be a major test for whether the GOP caucus can push through the Boehner measure in the face of an expected unified Democratic opposition. Republicans hold 240 of the 433 votes to be cast and need 217 of their members to support the plan for it to pass. Two House seats are currently vacant.

Meanwhile, the nonpartisan Congressional Budget Office said that revisions to Boehner's plan would bring a total of $915 billion in savings over 10 years, an increase of about $65 billion over the initial version. With the revisions, Boehner's proposal - which calls for an immediate $900 billion increase in the debt ceiling - now meets his pledge to match any debt ceiling hike with dollar-for-dollar spending cuts.

However, a letter Wednesday from Senate Democrats said the Republican plan has no chance of passing the Senate. For their part, top Republicans called the Democratic plan a nonstarter.

As the politicians bickered, the clock continued to tick down. If Congress fails to raise the current $14.3 trillion debt limit by August 2, Americans could face rising interest rates and a declining dollar, among other problems.

As the cost of borrowing rises, individual mortgages, car loans and student loans could become significantly more expensive. Some financial analysts have warned of a potential stock market crash and a downgrade of America's triple-A credit rating.

Without an increase in the debt limit, the federal government will not be able to pay all of its bills next month. President Barack Obama recently indicated he can't guarantee Social Security checks will be mailed out on time.

With no deal in sight and six days before potential default, the Dow Jones Industrial average fell 198 points on Wednesday.

Updated: 9:20 pm

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July 25th, 2011
07:30 PM ET

Boehner, Reid unveil new debt plans as deadline nears

Washington (CNN) - Democratic and Republican congressional leaders unveiled new deficit reduction plans Monday as top officials scrambled to bridge a cavernous partisan divide and raise the federal government's debt ceiling before an unprecedented - and potentially devastating - national default.

Both plans provide a path to raise the debt ceiling through the end of 2012, but differ sharply in terms of their requirements for future congressional action and both tax and spending reform requirements.

President Barack Obama is scheduled to deliver remarks on the state of the negotiations at 9 p.m. ET, according to White House press secretary Jay Carney.

According to Democratic officials familiar with the speech, Obama will emphasize that a congressional stalemate exists and requires compromise to avoid an imminent threat of default.

The sources, who spoke on condition of not being identified, said Obama also will criticize House Republicans for an intransigent approach and encourage Americans to tell their elected representatives that compromise is needed.

While Obama will endorse a Democratic plan proposed Monday by Senate Majority Leader Harry Reid, he will acknowledge the plan has little chance of getting passed in the Republican-controlled House, just as the competing Republican plan unveiled Monday by House Speaker John Boehner is unlikely to get passed by the Democratic-majority Senate, the sources said.

The president will push for the two parties to work out an acceptable deal, and the speech will not include any details for a government contingency plan in the event of a default, the sources added.

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July 21st, 2011
06:30 PM ET

Possible deficit reduction deal emerging, sources say

Washington (CNN) - President Barack Obama is continuing to pursue the most "significant deficit reduction package possible," White House Press Secretary Jay Carney said Thursday, the latest indication officials are keeping a variety of options open while trying to hammer out an agreement to raise the nation's debt ceiling and avoid an unprecedented default.

The president and Vice President Joe Biden met Thursday afternoon with Democratic leaders from the House and Senate as sources indicated the negotiations were focusing on a deal to cut $3 trillion in federal deficits over the next 10 years that would be accompanied by a debt ceiling increase.

According to the congressional aides who spoke on condition of not being identified, the possible deal remains in limbo over a disagreement on whether to extend Bush-era tax cuts for families earning more than $250,000 a year. Nothing has been agreed to yet, they noted.

The possible deal would include spending cuts expected to total $1 trillion or more agreed to in earlier negotiations led by Vice President Joe Biden, the sources said. It also would reform entitlement programs by changing the eligibility age for Medicare over time, and using a more restrictive inflation index for Social Security benefits, according to the sources.

On taxes, it would permanently extend the Bush tax cuts for families earning less than $250,000 while allowing the cuts to expire at the end of 2012 for those with income above that, the aides said. At the same time, the deal would include a commitment to reform the tax code next year, which is expected to lower all tax rates and eliminate loopholes and subsidies, the sources said.

However, House Speaker John Boehner, R-Ohio, wants the deal to make all of the Bush tax cuts permanent while keeping the commitment to tax reform, the sources said. Republicans oppose any tax hikes, and their resistance has been a major obstacle to any deal in the negotiations so far.

Some sources said the deal would work in two stages, with spending cuts and a debt ceiling increase occurring right away while entitlement reforms and tax reforms would occur later.

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July 20th, 2011
08:00 PM ET

Obama continues debt talks with Democrats, then Republicans

Washington (CNN) - President Barack Obama held separate meetings Wednesday with top congressional Democrats and Republicans as part of ongoing talks on a measure that would raise the nation's debt ceiling by August 2 to avoid a government default.

With time running out to reach an agreement, the possibility of a comprehensive deficit-reduction deal sought by Obama appeared less likely, with the president and Congress instead being forced to focus on a more narrow goal of increasing the government borrowing limit in the next 13 days so it can pay its bills after August 2.

At his daily briefing, White House Press Secretary Jay Carney signaled to reporters that Obama would be willing to accept a short-term increase in the debt ceiling - which caps the amount of money the government can borrow - if it is tied to agreement by both parties on a broader deficit reduction deal sought by the president.

Obama previously rejected such a short-term increase in the debt ceiling, and Carney's remarks sought to bolster support for a compromise in the talks as the deadline for default nears.

"We believe a short-term extension absent an agreement to a larger deal is unacceptable," Carney said.

He later issued a statement on the matter that said Obama opposes a short-term extension of the debt limit, but "the only exception to that is in the event that both sides reach a deal on a long-term extension of the debt limit plus significant deficit reduction, and we needed a very short-term extension (like a few days) to allow a bit of extra time for a bill to work its way through the legislative process."

So far, the main sticking point in negotiations has been Republican refusal to accept increased tax revenue sought by Obama and Democrats as part of a deal. Spurred by conservatives elected with tea party backing, Republicans seek to shrink the size of government through spending cuts while either keeping tax revenues where they are now or reducing them through a reformed system.

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July 19th, 2011
08:46 PM ET

House passes GOP debt measure; Obama praises compromise plan

Washington (CNN) - The U.S. House on Tuesday night passed the "cut, cap and balance" deficit reduction plan backed by tea party conservatives but dismissed by President Barack Obama, who offered strong praise for another proposal put together by a bipartisan group of senators.

The so-called Gang of Six plan - drafted by three Democratic and three Republican senators - presents a possible compromise to Obama and congressional leaders as they approach a deadline for a deal on cutting federal deficits in order to gain Republican support for raising the federal debt ceiling to avoid an unprecedented default.

It would cut the nation's debt by about $3.7 trillion over the next 10 years - similar to the president's call for roughly $4 trillion in savings.

Obama called the plan by the Gang of Six senators "broadly consistent" with his own approach to the current debt ceiling crisis because it mixes tax changes, entitlement reforms and spending reductions.

However, the top two Democrats in the Senate said they don't think there is enough time before the government needs to borrow more money on August 2nd to pass the comprehensive Gang of Six plan.

Meanwhile, the Republican-led House of Representatives voted 234-190 to pass the "cut, cap and balance" plan that would impose strict caps on all future federal spending while making it significantly tougher to raise taxes - the solution favored by hard-line conservatives.

The vote was almost completely on party lines for the measure that included the requirement that Congress pass a balanced budget amendment to the U.S. Constitution before agreeing to extend the federal debt ceiling..

Obama has said he would veto such a measure, and Senate Democrats are expected to kill it. On Tuesday, the president said legislators "don't have any more time to engage in symbolic gestures" with time running out to raise the debt ceiling in order to avoid default.

"We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts (and) modifications to Social Security, Medicaid and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component," Obama added. "We now have a bipartisan group of senators who agree with that balanced approach. And we've got the American people who agree with that balanced approach."

Obama also refused to rule out the fallback plan proposed by Senate Minority Leader Mitch McConnell, R-Kentucky, that would raise the debt ceiling up to $2.5 trillion through the 2012 election.

If Congress fails to raise the current $14.3 trillion debt ceiling by August 2, Americans could face rising interest rates, a declining dollar and increasingly jittery financial markets, among other things.

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July 18th, 2011
04:00 PM ET

Debt fallback plan gains momentum as GOP plans symbolic votes

Washington (CNN) - Top administration and congressional officials are expected to continue working this week on a measure to raise the federal debt ceiling by up to $2.5 trillion, embracing a version of a fallback plan designed by Senate Minority Leader Mitch McConnell to avoid a potentially catastrophic default.

At the same time, GOP leaders are planning a series of votes on a proposed balanced budget amendment to the Constitution and sharp caps on future spending. The bills have no chance of clearing Congress or winning the approval of President Barack Obama, but would allow Republicans to demonstrate their preference for steps favored by their party's conservative base.

The maneuvering will take place against a backdrop of heightened anxiety as fears rise that Washington will not be able to pay its bills starting next month. If Congress fails to raise the current $14.3 trillion debt ceiling by August 2, Americans could be hit with rising interest rates, a plummeting dollar, and increasingly jittery financial markets, among other things.

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July 15th, 2011
02:45 PM ET

Obama renews push for grand bargain on debt

Washington (CNN) - President Barack Obama said Friday he has not given up hope for a broad deficit reduction deal, urging Republicans to accept a fiscal stability package that includes higher taxes on the wealthy and reforms to politically popular entitlement programs such as Medicare and Social Security.

Such a measure would be part of plan to avert a potential economic meltdown by raising the nation's current $14.3 trillion federal debt ceiling.

The president also stressed he has not ruled out less ambitious plans focused more narrowly on a debt ceiling increase.

Let's "set politics aside" and "do some tough stuff," Obama told reporters at a White House news conference. But "if Washington operates as usual and can't get anything done, let's at least avert Armageddon."

Tense negotiations between top Democrats and Republicans, reflecting core ideological principles on taxes and the size of government, have become a race against the clock. Administration officials have warned that a failure to raise the debt ceiling by August 2 could trigger a partial default.

If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.

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July 14th, 2011
07:00 PM ET

Latest talks end with no deal and no meeting on Friday

Washington (CNN) - A fifth meeting in five days involving President Barack Obama and top congressional leaders failed to achieve a breakthrough on Thursday and no talks were planned for Friday, which the White House had called a deadline for deciding the way forward.

According to a source familiar with the debt conversations, who spoke on condition of not being identified, there will be no meeting Friday. There was no word on when the direct negotiations would resume.

Senate Minority Leader Mitch McConnell called Thursday's 80-minute session a good meeting and said, "We'll continue to discuss a way forward over the next couple of days and see what happens."

Earlier, the White House said the negotiators will have to shift their focus to increasing the federal debt ceiling if they fail to make significant progress by Friday toward a comprehensive deficit reduction deal that would cut spending and raise taxes.

Administration officials have warned that a failure to raise the current $14.3 trillion debt ceiling by August 2 could trigger a partial default. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.

Republicans have tied their support for a debt ceiling increase to steps to reduce mounting federal deficits such as deep spending cuts and reforms to entitlement programs. Democrats agree on the need for a deficit reduction plan, but the two sides remain divided over the size and scope of a deal as time runs out for getting the debt ceiling raised to ensure the government can pay all its bills.

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