Top of the Agenda: Debt Fight Shifts to Congress from the CFR

Top of the Agenda: Debt Fight Shifts to Congress

With two weeks until an August 2 deadline that could see the U.S. default on its debt obligations, and talks over a deficit-reduction plan all but dead, congressional leaders (WSJ)

 

in the House of Representatives and the Senate are pushing forward with last-minute, alternative legislative measures.

The House will vote on a "Cap, Cut, and Balance" bill (CNN)

 

Tuesday--legislation that would cut government spending by $2.4 billion over ten years, set strict caps on future spending, and lift the debt ceiling, though only on the condition that Congress pass a constitutional amendment mandating a balanced budget. The legislation is expected to pass the House but not to make it through the Senate. The White House has indicated that President Barack Obama would veto any such measure.

Meanwhile, the Senate is moving forward with a plan being drafted by Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid that would empower the president to raise the debt ceiling in tranches (WashPost)

 

, while only implementing around $1.5 trillion in savings already agreed upon by Republicans and Democrats. The plan would also establish a bipartisan congressional committee to draft a more comprehensive and long-term deficit-reduction plan.

The bipartisan Senate proposal has triggered infighting among the GOP (Politico

 

), and it is still unclear whether House Republicans could ultimately support the McConnell-Reid plan.

Analysis:

McConnell's plan could lead to a "day of reckoning"

 

for Republicans, giving them an opportunity to blame any future fiscal problems on President Obama and the Democrats, says this Reuters analysis.

The Tea Party, which is heavily influencing House Republicans in the debt debate, is promoting a form of constitutional fundamentalism

 

that is very like religious fundamentalism, writes the Financial Times' Gideon Rachman.

With the deadline looming for resolving the U.S. debt standoff, concern is rising

 

among international creditors and markets about the largest economy and home of the world's reserve currency, says this CFR Analysis Brief.