Senate Democrats have delayed a key Sunday morning test vote on legislation to raise the debt limit, as negotiations to avoid a catastrophic debt default drag on.
Late Saturday, Senate Majority Leader Harry Reid (D-NV) announced on the Senate floor that the White House is making progress in those negotiations, but several issues remain unresolved.
“There are negotiations going on at the White House now on a solution that will avoid a catastrophic default,” Reid said. “There are many elements to be finalized, there is still a distance to go before any arrangements are to be complete. I’ve spoken to the White House quite a few times this weekend, and they’ve asked me to give everyone as much time as possible.”
Earlier Saturday, Dems were prepared for the 1 a.m. vote to fail, based on continued disagreement between the two parties over how to assure future cuts to entitlement programs and tax reform, according to a highly placed Democratic source. That vote is now scheduled for 1 p.m., Sunday.
Both the House and Senate debt limit votes call for the creation of a bipartisan, bicameral committee tasked with reducing the deficit by at least $1.8 trillion through entitlement and tax reform. But Republicans are reluctant to count that $1.8 trillion toward the debt limit increase unless there’s a viable penalty in place that would be triggered if the committee gridlocks, Congress fails to pass their proposal, or President Obama vetoes it.
As noted here, Republicans are insisting on skewed triggers. The source provided some fresh details on precisely what they’re asking for. One of their proposals would alter the way the government calculates inflation. It would thus reduce automatic increases in tax bracket levels and Social Security cost of living adjustments — in effect a regressive tax increase, and a Social Security cut, each of which would result in modest savings.
Democrats reject this so called “chained CPI” option because they fear Republicans would happily block a balanced spending cut/tax increase package in favor of an automatic Social Security cut.
Republicans have also proposed “automatic sequestration” — across the board spending cuts, including to entitlements — with no corresponding revenue increases.
In a retread of a familiar fight, Dems are only willing to consider any options along these lines without corresponding revenues. They worry that the penalty will ultimately be more appealing to the GOP than any possible bipartisan fiscal package, and passively allow it to be triggered. Thus, they’re pushing for the penalty to include decoupling Bush tax cuts for the wealthiest Americans from the rest of the Bush tax cuts, so that they would expire automatically. They’re also open to loophole closures and ending certain tax expenditures.
The White House is now taking a lead role in resolving this impasse. The delay could bring the debt limit fight down to the wire. If Republicans use all the procedural tools they can to delay final passage, it could drag the Senate debate late into Monday, giving the House just over 24 hours to pass the compromise, before the nation runs out of borrowing authority.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at email@example.com.