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Passing major debt deal by Aug. 2 seems doubtful

WASHINGTON — It may be even more difficult than it appears for Congress to reach a broad deal to raise America's borrowing limit and slash spending by Aug. 2. Maybe all but impossible.

Even if quarreling lawmakers can somehow agree this month, it is doubtful that Congress can write it up in binding fashion and pass it by one month from today. That's when, the Treasury Department declared anew on Friday, the government will start running short of money to pay the nation's bills.

Congress could end up having to vote at least twice on the politically poisonous issue of raising the debt ceiling, now $14.3 trillion, to avoid a first-ever government default. The first vote would be on an interim raise, possibly in the tens or even hundreds of billions of dollars, to give Congress time to wrap up a grand bargain allowing the government to go trillions of dollars deeper into debt in exchange for spending cuts and possibly higher taxes totaling an equal amount.

"It will take time, and that is a bit troublesome," says Sen. Jon Kyl, R-Ariz., who represented Senate Republicans in budget talks led by Vice President Joe Biden. "Nobody wants this to be just parachuted in three days before they vote on it."

Veterans of previous budget deals say there's no way President Barack Obama and Congress can meet the Aug. 2 deadline even if a broad overall agreement is reached in the next two weeks. First, it could take weeks more for lawmakers and staff aides to implement that deal negotiated by the president and the two parties' leaders.

Then, lawmakers would need time to examine and digest the legislation. And that's hardly all.

"There's the need to write it, the need to read it, the need to understand it, the need to score it, the need for it to be 'real,' the need for it to be processed and supported by each side's base, the need to assemble the necessary votes," said GOP lobbyist Eric Ueland, a former longtime Senate aide.

And that's assuming everything goes according to plan — that the debt-budget pact doesn't get blown up by a revolt from the tea party on the right or frustrated Democrats on the left. That's a huge "if."

It took many months to move a 2005 budget-cutting bill — which ended up cutting about $100 billion over 10 years — through the system, and that was when Republicans controlled both the White House and all the congressional committees that drew the legislation up.

Now, GOP-controlled House panels and Democratic-led Senate committees with little experience working together will have to write up an agreement hatched by Obama and the top leaders in both parties. Battles are unavoidable. The House and Senate Agriculture committees, for example, will be asked to implement farm subsidy cuts they either disagree with or would prefer to do in a more deliberate fashion later.

Even items that both sides agree on, such as lucrative auctions of electromagnetic spectrum to wireless companies, can be enormously complicated to implement. Core questions, like how much money to devote to building a new, more effective wireless system for emergency responders and how much to compensate broadcasters for giving up their existing rights to spectrum, seem much too complicated to resolve in a couple of weeks.

The degree of difficulty is heightened by the desire to generate a package of deficit cuts in the range of $2.4 trillion over the coming decade to balance a similar increase in the debt limit — one that's large enough to keep the government afloat past the November 2012 election.

Discussions led by Biden focused on well over $1 trillion in savings, most from the pot of money assigned to Cabinet agency budgets passed each year by Congress. But the types of additional ideas that could get lawmakers to the $2 trillion-plus target, like cuts to Medicare providers or targeted tax increases, invite sparring from industry groups and their defenders on Capitol Hill.

Another idea, a new government cost-of-living adjustment that would affect both Social Security benefits and tax brackets, is simpler to draft but may be too big a lift politically.

So what are the chances of threading the needle and getting a $2.4 trillion debt pact passed by Aug. 2?

"You can't," says Bill Hoagland, a former Senate GOP veteran of budget deals dating back to the Reagan administration. "All I can think here is that if you had an agreement in principle, that then you would have an agreement to vote on a temporary increase in the statutory debt limit while the details are worked out and the legislative language is put together."

Treasury still stands by the date

The Aug. 2 debt ceiling deadline is holding firm. The Treasury Department said Friday that its latest estimates still show that is the date the government will exhaust its ability to pay all of its bills, unless Congress agrees to raise the total amount of money the United States can borrow. The White House is warning that a deal must be reached by mid July to leave enough time for the necessary legislation to be written and passed into law.

Associated Press

Passing major debt deal by Aug. 2 seems doubtful 07/01/11 [Last modified: Friday, July 1, 2011 10:40pm]
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