In a crafty move that both forces the White House to commit to spending cuts and avoids a default on the U.S. debt, the Senate GOP, led by Minority Leader Mitch McConnell, today is proposing a three-part plan to settle the divisive issue through the end of next year.
Under the plan being unveiled this afternoon, the GOP would set up three different tranches of money needed to raise the debt ceiling—one of $700 billion and two of $900 billion. President Obama would have to first request the money and also offer up spending cuts to off-set the higher spending.
When the request comes in, $100 billion would be released to avert a default, like the threatened one on August 2, and Congress would have 15 days to consider denying the remainder of his request under a legislative provision called "joint resolution of disapproval."
If the disapproval is defeated, the rest of the money would be released. If both chambers pass the disapproval, Obama could veto and an override vote would then occur. If overridden, the money would be revoked. If not, Obama gets the whole tranche even if he doesn't offer up supporting spending cuts.
It's expected that Obama would seek the money now, in the fall of 2011 and summer of 2012.
Officials said it's likely that any request will be disapproved because the GOP doesn't believe that the president will offer up firm offsetting spending cuts.
"They've offering $2 billion in discretionary savings and over $1 trillion in tax increases. That's just not going to happen and they need to realize it," said a GOP source.
Officials explain that it gives the two sides three chances to finally come up with a large deal and escape hatches to allow a debt limit increase and avoidance of default if neither side can agree, as it appears now.
But if his vetoes aren't overridden, then essentially Obama will get what he wants without offering up key cuts, and he will own any economic fallout, said another source. "Obama essentially owns the whole thing and is solely responsible for the increase," said the official.