Debt debate: Where things stand
The debt ceiling plan proposed by Senate Majority Leader Harry Reid was rejected by the GOP-controlled House on Saturday.
July 31st, 2011
10:09 AM ET

Debt debate: Where things stand

Sunday morning there was news that there could be a deal struck on the fight over the debt ceiling, which is nearing a deadline on August 2.

But without any final plan, the fierce tug-of-war between Democrats and the GOP over whether to raise the government's $14.3 trillion debt ceiling continues.

If the debt ceiling isn't raised, many, including President Barack Obama and the Treasury Department, warn that the country will risk unprecedented default. That default could cause Americans to face rising interest rates. It could also mean that the value of the U.S. dollar would drop compared to other currencies. As interest rates increase, the cost of borrowing rises, so individual mortgages, car loans and student loans could become significantly more expensive. As individual Americans' personal finances take a possible hit, some financial experts have warned that America's AAA credit rating could also be downgraded, threatening an already drooping stock market.

Obama recently indicated he can't guarantee Social Security checks will be mailed out on time if the debt ceiling is not raised. Other critical government programs could be in jeopardy as well. Several CNN iReporters have weighed in on how the debt ceiling issue is affecting their lives. Here are a few answers to the big "What Ifs" of the debt debate compiled by Reuters, and linked out from CNN's Political Ticker and Candy's Crowley's Sunday show "State of the Union".

So where does America go from here? What lies ahead today and for the week?

HOUSE

The GOP-controlled House on Saturday rejected the debt ceiling plan proposed by Senate Majority Leader Harry Reid, D-Nevada. The plan was rejected 173-246; a two-thirds majority was required for passage. Most Democrats supported Reid's plan, while every Republican in the chamber rejected it. On Friday, the House passed a proposal put forward by Speaker John Boehner, R-Ohio, that seeks to raise the debt ceiling and cut government spending while requiring that Congress pass a balanced budget amendment to the U.S. Constitution. The 218-210 vote was strictly on party lines. The Senate then voted 59-41 to table Reid's bill, effectively killing it.

Boehner's plan calls for $917 billion in savings over the next decade, while creating a special congressional committee to recommend additional savings of $1.6 trillion or more. It would allow the debt ceiling to be increased by a total of roughly $2.5 trillion through two separate votes. The $2.5 trillion total would be enough to fund the federal government through the end of 2012. The plan originally called for a congressional vote on a balanced budget amendment to the Constitution by the end of the year. Boehner then reached out to disgruntled conservatives by amending the plan to require congressional passage of such an amendment as a condition for raising the debt limit by the full $2.5 trillion.

SENATE

Late Saturday night, Reid announced a 12-hour delay on a key procedural vote on his debt ceiling proposal. The vote to end debate and break a GOP filibuster will now be held at 1 p.m. ET Sunday, as opposed to 1 a.m. Forty-three of 47 Senate Republicans signed a letter to Reid Saturday warning that they would not vote for his proposal as currently constituted.

Reid's plan would reduce federal deficits over the next decade by $2.4 trillion while raising the debt ceiling by a similar amount - meeting the GOP's demand that total savings should at least equal any total debt ceiling hike. Roughly $1 trillion of the savings is based on the planned U.S. withdrawals from military engagements in Afghanistan and Iraq. Reid's plan also would establish a congressional committee made up of 12 House and Senate members to consider additional options for debt reduction. The committee's proposals would be guaranteed a Senate vote with no amendments by the end of this year. In addition, it incorporates a process proposed by McConnell that would give Obama the authority to raise the debt ceiling in two steps while providing Congress the opportunity to vote its disapproval.

PRESIDENT OBAMA

On Saturday at the White House, Obama met with Reid and House Minority Leader Nancy Pelosi, D-California.

The president has endorsed Reid's plan and threatened to veto Boehner's plan. Obama strongly opposes any bill that doesn't raise the debt ceiling through the 2012 election. He has promised to veto any short-term debt ceiling extension unless it paves the way for a "grand bargain" of more sweeping reforms and revenue increases.

On Friday, Obama urged Senate Democrats and Republicans to take the lead in congressional negotiations. He said the House GOP plan "has no chance of becoming law." Obama also urged Americans to keep contacting members of Congress in order "to keep the pressure on Washington." The president made a nationally televised plea for compromise Monday night, though he also criticized Republicans for opposing any tax hikes on the wealthy.

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Filed under: Budget • Economy • John Boehner • Politics
soundoff (63 Responses)
  1. Jazzzzzzzz

    Afternoon Ruffles, what you up to on this Sunday?

    July 31, 2011 at 12:59 pm | Report abuse |
  2. Grant

    Hasn't the Tea Party violated the 14th Amendment by holding the voting of the debt ceiling hostage to their agenda. The 14th Amendment was orginally disigned to forbid a polical faction to challenge the government's obligations and payment thereof. Anything but a clean bill, as has always been the case, presents a constutional issue.

    July 31, 2011 at 1:02 pm | Report abuse |
  3. Jazzzzzzzz

    Russia doesn't need to buy Alaska if they have the (directed free-energy tech weapon) in their possession. and that is a big if! Alaska will hand it over in two seconds FLAT !

    July 31, 2011 at 1:09 pm | Report abuse |
  4. Jason C. NY,NY

    This new debt agreement is an insult to Democrats everywhere. I will never give another penny to the Democratic cause, especially Obama. After 45 years, he has singlehandedly turned me into a Republican.

    July 31, 2011 at 1:32 pm | Report abuse |
  5. Jazzzzzzzz

    both sides are clearly in default of there promise to serve its people!

    July 31, 2011 at 1:34 pm | Report abuse |
  6. RUFFNUTT

    if we sold alaska it would be all profit... what about that lost ducthman's mine... the one with all the gold that the goverment bought the land and is supposedly full of gold? why not did for gold? i seen it on unsolved mysteries.....

    July 31, 2011 at 1:35 pm | Report abuse |
  7. Centrist

    All theater.. Relax and go outside or something.

    July 31, 2011 at 1:38 pm | Report abuse |
  8. Jazzzzzzzz

    wold that be the 1 million...trillion...zillion gold coins the Fed rev has, your speaking of.

    July 31, 2011 at 1:40 pm | Report abuse |
  9. Jazzzzzzzz

    Sticking my head out the window...Nah looks like rain.

    July 31, 2011 at 1:41 pm | Report abuse |
  10. RUFFNUTT

    i'd go outside but i already did that last week...

    July 31, 2011 at 1:48 pm | Report abuse |
  11. Jazzzzzzzz

    awww, your wife doesn't let you out that much does she, BOO WHOOO, sorry a little ribbing my friend

    July 31, 2011 at 1:50 pm | Report abuse |
  12. RUFFNUTT

    she's a russian spy... and keeps me tied up...

    July 31, 2011 at 1:55 pm | Report abuse |
  13. Jazzzzzzzz

    LMAO x 10 , your the greatest ya know? (Mohammend Ali) He He

    July 31, 2011 at 2:02 pm | Report abuse |
  14. RUFFNUTT

    she uses mind control technics on me...obviously she was a spy at one time..

    July 31, 2011 at 2:07 pm | Report abuse |
  15. Jazzzzzzzz

    you may proceed... rest of the story please!

    July 31, 2011 at 2:07 pm | Report abuse |
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