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McConnell Outlines Three-Step Debt Contingency Plan

Updated: 7:47 p.m.

Senate Minority Leader Mitch McConnell (R-Ky.) introduced an emergency backup debt plan Tuesday, spurred by his growing frustrations with the White House and a stalemate between top Congressional leaders on a deal to cut trillions of dollars from the deficit.

McConnell’s “contingency plan” would raise the debt ceiling in three increments before the 2012 elections, using a maneuver that would essentially allow Congress to vote down any debt limit increase but give the president more political power to ensure the government’s borrowing authority can be increased. Effectively, the plan, if enacted, would put more pressure on Democrats by forcing them to provide the votes to prevent the nation from defaulting.

“If we’re unable to come together, we think it’s extremely important to this country to reassure the markets that default is not an option,” McConnell said Tuesday. “If the White House talks lead not to a conclusion we can go forward together to reduce spending, which is our single biggest problem, then what is the alternative?

“This is again not my first choice,” McConnell said about the proposal.

Under McConnell’s proposal, the president would send a request to Congress for a series of debt limit increases that would have to be offset with spending reductions elsewhere. Congress would be allowed to vote on a resolution of disapproval that would kill the increase, but the president would be able to veto that resolution. Congress then would have to come up with a two-thirds supermajority to prevent the debt ceiling from increasing. A provisional $100 billion would be immediately added to the debt ceiling at the time of the president’s first request to avert default this August while the potentially time-consuming procedural back-and-forth with the White House began.

First, however, Congress would have to pass a bill that sets up the votes and resolutions of disapproval, putting Republicans on the hook for voting for that additional $100 billion in debt.

McConnell’s push to have three votes on raising the debt ceiling before 2012 could be rejected by President Barack Obama, given that the president has said he will not sign any deal that does not extend past next year’s election. But an agreement on a three-vote strategy could satisfy Obama’s requirement that a plan be in place to increase the debt ceiling during that time frame.

Lawmakers are pushing up against an Aug. 2 deadline to raise the debt ceiling but have been insisting on finding a larger deal to also reduce the deficit. With both parties digging in on their priorities — Republicans on taxes and Democrats on entitlements — talks on a larger deal to cut trillions over the next decade have reached a stalemate.

According to GOP aides, McConnell was wary of another agreement that resembled the deal struck by Obama, Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) in April to avert a government shutdown. The deal was touted as saving $38 billion from current-year spending, but the Congressional Budget Office ultimately scored the bill as saving only $350 million through September.

The framework McConnell announced Tuesday would have a vote this month for a $700 billion increase, a second this fall worth $900 billion and a third next summer for another $900 billion. It was not immediately clear whether House Republicans or Senate Democrats would get behind such a plan. A Democratic aide noted that such an “out-of-the-box” proposal and its Senate-centric nature might prove complicated in the House. Because of the procedure surrounding resolutions of disapproval, in order for the plan to work, it would need the support of a two-thirds majority to approve by overturning a presidential veto.

Reid did not reject the proposal when asked about it Tuesday, but he indicated he didn’t know much about it.

McConnell’s announcement Tuesday was not based exclusively on deadline pressure.

Apparently, after Monday’s contentious White House meeting, McConnell decided he did not want to take a backseat in the ongoing budget negotiations that have been dominated by Obama and House GOP leaders.

In the nearly two-hour-long White House meeting Monday afternoon during which leaders reviewed savings found last month by a group led by Vice President Joseph Biden, McConnell asked only one question, according to a Republican source familiar with the talks.

“How much does the Biden plan actually cut from next year’s discretionary spending budget?” the Kentucky Republican asked the room.

Obama’s Office of Management and Budget Director Jacob Lew told him, “$2 billion.”

A second source close to the original Biden group confirmed this number.

McConnell grew frustrated in the closed-door meeting, complaining that such a sum was too small, given the scale of the savings Members on both sides of the aisle were hoping for. McConnell’s displeasure spilled over to the Senate floor Tuesday morning, when he attacked Obama for presenting Republicans with “gimmicks” instead of solutions.

“The hope here was that budget gimmicks and deferred decision-making they actually support would have the appearance of serious belt-tightening. But the practical effect would have been, at most, about a couple of billion dollars in cuts up front with empty promises of more to follow,” McConnell said early Tuesday morning.

“President has presented us with three choices: smoke and mirrors, tax hikes, or default. Republicans choose none of the above,” he continued.

Humberto Sanchez contributed to this report.

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