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Path to a Debt Deal Becoming Clearer, but Someone’s Got to Give

Updated: 12:54 a.m.

So, it all comes down to this: Who’s going to cave?

Both chambers were making a show Thursday of standing their ground in the debt ceiling debate, with House GOP leaders insisting on Speaker John Boehner’s (R-Ohio) deficit-cutting plan attached to a $900 billion debt limit increase, and Senate Majority Leader Harry Reid (D-Nev.) promising to kill it.

With just a few days before the Treasury Department says the U.S. needs a debt limit increase or risks default on its obligations, both sides were increasing the brinksmanship. But for all the partisan back-and-forth, the endgame comes down to whether Senate Democrats and the White House will swallow a short-term debt deal or whether House Republicans agree to a compromise that takes default off the table through 2012.

“The short-term is not a minor detail,” a senior Senate Democratic aide insisted. “It is the whole ballgame. We will never, ever pass it.”

House Republicans are likewise adamant about denying President Barack Obama one of his key demands — a debt limit increase that would last beyond the 2012 elections.

Majority Leader Eric Cantor (R-Va.) said Thursday that Reid has a simple choice: either accept the Boehner bill or the earlier House-passed Cut, Cap and Balance bill that was soundly defeated in the Senate, or “suffer the economic consequences of default.”

Senators in both parties and the White House, however, have been trying for weeks to find a way to bridge the difference, and Democrats warn that Republicans are playing with fire if they don’t agree to a long-term debt limit increase.

“If that is the way it is, I think they are going to pay a huge price in the next election for their intransigence and recklessness,” Sen. John Kerry (D-Mass.) said when told of Cantor’s remark.

Kerry, chairman of the Foreign Relations Committee, said he’s heard from leaders around the world — even Greece — who are worried about the risk of a default.

One potential solution Democrats and Obama have already said they are open to is Senate Minority Leader Mitch McConnell’s (R-Ky.) fallback plan, which would give Obama the authority to raise the debt limit on his own but permit Congress to vote on resolutions of disapproval.

One possibility is marrying the McConnell language — or something like it — to a tweaked version of Boehner’s bill, aides in both parties said.

Senate Majority Whip Dick Durbin (D-Ill.) said the approach could work for Democrats because it would take default off the table as a practical matter.

Durbin said Thursday that serious negotiations on a deal would not happen until the House voted on the Boehner plan. But House GOP leaders postponed a Thursday evening vote when it became clear that Boehner’s bill didn’t have the support to pass, and it was uncertain when the measure might come back to the floor.

“We’ve got to play the next two cards, then talk,” Durbin said.

Democratic officials said Thursday that Obama has been in contact with Congressional leaders and Members during the debt limit drama. They believed that after the Boehner bill is dispensed with, there would be a greater sense of urgency toward getting a deal. Officials also said they believe Senate Republicans are increasingly open to a compromise and are looking to McConnell to help broker a resolution.

Durbin later said on the Senate floor that Reid’s bill would likely come up for a vote Friday or Saturday.

On Thursday, House Republicans continued to insist that they would not accept anything short of a guarantee that spending cuts will fully offset the debt limit increase. One senior House aide said anything else — including a Boehner-McConnell hybrid — cannot pass.

But Boehner has never completely dismissed the McConnell proposal — noting when it was introduced that it might look better closer to Aug. 2 and that default was not an option.

But to get a plan like that passed by the House, Boehner might have to rely heavily on Democratic votes. Most House Democrats could be expected to vote for a plan that takes default off the table, according to Democratic aides, making it easier for Boehner to find a majority.

McConnell said Thursday that the Boehner bill is the “only” one that can pass and reach the president’s desk, and he urged Democrats to back it.

But he already warned his party of the political consequences of a default when he announced his fallback, warning that defaulting would “destroy” the Republican brand and help re-elect Obama in 2012.

The White House and Democratic officials hope the path to compromise lies in beefing up a joint deficit reduction committee envisioned by the Reid, McConnell and Boehner plans. Officials said they were also looking to enhance the spending targets with triggers that would cause pain for both political parties if Congress failed to enact additional deficit reduction — similar to the Gramm-Rudman-Hollings spending caps from decades ago.

The Democratic officials said the goal would be to provide an incentive for Congress to reach a deal without the threat of default — and provide more assurance that additional cuts will materialize.

Sen. Benjamin Cardin said a trigger that would force Congress to act will play an important role in getting a deal.

“That is what they are arguing about,” the Maryland Democrat said.

Senate Budget Chairman Kent Conrad agreed.

“The key is that you get assurance at the end of the day, if the special committee doesn’t perform, that you get an answer,” the North Dakota Democrat said.

Conrad indicated that a trigger would need to apply to taxes as well as spending cuts, but that issue is one of the reasons Republicans have continued to walk away from talks with Democrats and the White House.

Another proposal would allow a bipartisan group of Senators to get a vote on a deficit reduction package on the Senate floor if a joint committee deadlocks or if its plan is not enacted. That, conceivably, would allow the Senate’s bipartisan “gang of six” proposal to come to the floor for a vote.

The trigger idea also is being pushed strongly by outside groups such as the Committee for a Responsible Federal Budget.

Reid hasn’t yet agreed to any triggers, however, and earlier declared the gang of six trigger “a little weak,” but he has repeatedly said that he is open to compromise and will work with McConnell to try to find a solution.

Other trigger proposals for automatic spending cuts, repealing parts of the health care law or tax increases have proved toxic to one party or the other, and disagreements over them helped contribute to the demise of the “grand bargain” negotiations between Boehner and Obama.

Other than the question of the debt ceiling, the Reid bill and the Boehner bill are nearly identical when it comes to the level of discretionary cuts over the next decade, with only a few differences in mandatory spending programs.

Reid’s plan assumes an additional $1.3 trillion in deficit reduction from a drawdown in war spending; House Republicans assume the exact same drawdown but just haven’t tried to use it as real savings.

A Senate Democratic aide said Boehner’s version of the joint committee, which is squarely aimed at entitlements, “won’t fly” and would need to be tweaked to look at deficit reduction in general.

John Stanton, Humberto Sanchez and CQ’s Paul Krawzak contributed to this report.

Editor’s Note:

This article updates the print version to include information on the House delaying a vote on Speaker John Boehner’s debt limit bill.

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