WASHINGTON — Senate Republicans unexpectedly offered Tuesday to hand President Barack Obama new powers to avert a first-ever government default threatened for Aug. 2.
Under a proposal outlined by Sen. Mitch McConnell of Kentucky, Obama could request — and likely secure — increases of up to $2.5 trillion in the government's borrowing authority in three separate installments over the next year, as long as he simultaneously proposed spending cuts of greater size.
The debt limit increases would take effect unless blocked by Congress under special rules that would require speedy action — and even then Obama could exercise his authority to veto such legislation. Significantly, the president's spending cuts would be debated under normal procedures, with no guarantee they ever come to a final vote.
Administration officials welcomed the McConnell initiative for at least signaling that both parties' leaders were committed to averting a potential economy-shaking government default; many Democrats in Congress saw it as a way to avoid the sort of deep cuts in Medicare, Medicaid and Social Security that Republicans have sought as the price of their votes for a debt-limit increase.
But many conservatives immediately assailed McConnell's proposal as a panicky sell-out, much as they in recent days had attacked the House Republican leader, Speaker John A. Boehner, for privately discussing with Obama a debt-reduction deal that could raise revenues as well as cut spending — ultimately forcing Boehner to retreat.
In an interview on CBS taped before the meeting, Obama said that without a deal to raise the debt limit, he could not guarantee that Social Security checks will be issued on Aug. 3 "because there may simply not be the money in the coffers to do it."
In essence, McConnell's proposal would greatly enhance Obama's authority to avoid a default, while also virtually absolving Republicans of responsibility if one occurred. At the same time, it would allow Republican lawmakers to avoid having to support an increase in the debt limit, something many of them find odious.
Boehner praised McConnell for doing "good work" but, in an interview on Fox News, did not endorse the proposal.
It was unclear whether McConnell's proposal could show the White House and congressional leaders of both parties a way out of a deadlock that Obama and others said threatened calamitous results for an economy still struggling to recover from the worst recession in decades.
It would obligate Obama to outline deep spending cuts, something Republicans have been trying to force him to do for months without much success.
Reductions as large as $2.5 trillion would almost certainly affect domestic programs seen as important by Democratic constituencies and by rank-and-file lawmakers, possibly including Medicare and Medicaid. Even if the cuts never took effect, Republicans would be able to call for votes, while identifying them as sponsored by the White House.
Any such proposals could also be used by Republicans in the 2012 campaigns, if only to blunt attacks made by Democrats.
The White House talks have been aimed at producing a compromise to cut projected deficits by trillions of dollars over the next decade while renewing the Treasury's authority to resume borrowing.
New York Mayor Michael Bloomberg said during the day that the two parties' debate over deficit reduction "should not be tied to the debt ceiling."
"America's good name and credit are just too important to be held hostage to Washington gridlock," he said in a speech a few miles away from the nation's financial center of Wall Street.
Neither McConnell nor Boehner has disputed the assertion that a default could bring disaster to the economy that is growing so slowly that unemployment stands at 9.2 percent nationally.
Still, in remarks made before McConnell unveiled his proposal, Boehner said bluntly of the president, "This debt limit increase is his problem and I think it's time for him to lead by putting his plan on the table — something that the Congress can pass."
Information from the New York Times was used in this report.