All of a sudden, Congress is full of debt ceiling solutions

The initiative for resolving the debt-limit crisis is shifting back from the White House toward Capitol Hill, where House and Senate leaders are preparing alternative legislative strategies to avoid default.

House Republicans on Friday released details of “cut, cap and balance” legislation, a framework that they say will make it possible for GOP lawmakers to support the president’s request for an increase in the debt limit. In return for approving a $2.4 trillion increase to the debt ceiling, the measure would cut total spending for 2012 by $111 billion, cap federal spending at 19.9 percent of gross domestic product by 2021, and require the passage of a balanced budget amendment to the US Constitution.

President Obama has called the idea not serious. "You'll probably see the House vote on a couple of things just to make political statements," he said Friday.

The emerging deal on the Senate side is seen as being the more likely path to a bipartisan deal. Senate majority leader Harry Reid is working to tweak a proposal by Republican leader Mitch McConnell that creates an expedited legislative procedure for raising the debt limit. Aides say that the final package could also include a broad range of spending cuts, as well as the establishment of a new bipartisan commission tasked with finding further cuts that would be politically feasible.

The Senate is also set to vote on a balanced budget amendment next week, but the vote is expected to fail. Though the measure is supported by all 47 Republicans, who say that a hike in the debt ceiling is not possible without it, it would need 23 Democratic votes to avoid a filibuster, which is unlikely.

Congress is under intense pressure to resolve the issue by Aug. 2, when the US Treasury estimates that the nation will need to borrow more money to cover its spending. After meeting with Senate Democrats on Thursday, Treasury Secretary Timothy Geithner told reporters: “We’ve looked at all options, and we have no way to give Congress more time.”

House Republicans devoted much of a closed caucus meeting on Friday to talk over whether, in fact, the US will default on its debt after Aug. 2. Some conservatives, including GOP presidential primary contenders, have charged that President Obama is bluffing and that the Treasury has enough ongoing tax revenues. Others say the Treasury could simply prioritize payments after Aug. 2, or dip into the Social Security Trust Fund.

But the PowerPoint presentation by the Bipartisan Policy Center at Friday’s GOP meeting signals that there are few viable options and that the US has “no secret bag of tricks to finance government operations past Aug. 2.”

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