"Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support," Reid said. "A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President."
Boehner's plan would reportedly codify about $1 trillion in spending cuts, and raise the debt limit by the same amount -- an extension that would last until about January by which point Congress would have to pass extensive entitlement and tax reforms, or risk default yet again.
Reid will counter this with legislation modeled on a plan first articulated by House Minority Leader Nancy Pelosi (D-CA). It's a cuts-only bill (no tax revenue) that Dems believe will score $2.7 trillion in savings. But it will likely rely on a projected "peace dividend" -- the expected drawdown of forces in Iraq and Afghanistan -- and Republicans have indicated in the past they don't support counting reduced war expenditures as savings.
"In an effort to reach a bipartisan compromise, we are putting together a $2.7 trillion deficit reduction package that meets Republicans' two major criteria," Reid said. "[I]t will include enough spending cuts to meet or exceed the amount of a debt ceiling raise through the end of 2012, and it will not include revenues. We hope Speaker Boehner will abandon his 'my way or the highway' approach, and join us in forging a bipartisan compromise along these lines."
Democrats don't currently have GOP buy-in on the plan, and House GOP aides were conspicuously silent about the proposal Sunday evening. But a highly placed Senate Democratic aide says the hope is that GOPers in both bodies feel pressed to support it on the grounds, more or less, that it's everything they've asked for from the beginning.
"It's $2.5 trillion in cuts and no revenue," the source said, before Reid's statement claiming a higher figure. "We think Republicans will have a hard time opposing it.
Democratic leaders left the White House Sunday reiterating that their opposition to a short-term debt limit increase is their only major bright line at this point. It remains to be seen whether Republicans will now claim a short-term increase is inviolable to them. It also remains to be seen whether Senate Republicans -- particularly dogged conservatives like Jim DeMint (R-SC) and Rand Paul (R-KY) -- will use procedural tricks to delay Senate action on Reid's legislation. Even if the plan ultimately has enough votes to overcome a filibuster -- still a big if -- Senate rules allow individual senators to delay final passage of a new bill by about five days. If Reid moves tomorrow and House and Senate Republicans join him, it might still not make its way to Obama's desk until August 2nd.