Progress Toward a Debt Deal?

With the clock ticking down to the reopening of the markets, Congressional leaders try to patch together a two-step agreement

With time running low for a resolution to a looming economic crisis, congressional leaders worked into Saturday night, negotiating to prevent default on the nation's debt and a potential financial market calamity. 

There were signs of progress: Both Democrats and Republicans are prepared to accept a two-step process for cutting the federal deficit by up to $3 trillion, but are at odds over whether the debt limit should be in one step that gets past the November 2012 election, or in two increments.

House Speaker John Boehner is pushing a plan that would raise the debt ceiling by $3 trillion or more in two steps or tranches, with both debt ceiling increases allowed only if matching spending cuts are identified, a senior Democratic aide familiar with talks today said. The total of $3 trillion or more in cuts, through two steps of $1.5 trillion or more, is the plan Boehner suggested on a call today with House Republicans, congressional aides in both parties said.

Boehner, Senate Majority Leader Harry Reid, D-Nev., House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Leader Mitch McConnell, R-Ky., all met for a one-hour meeting in Boehner's office Saturday evening.

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Earlier in the day, after the group had met with President Obama at the White House, Boehner's office had issued a statement in which Boehner said, "As I said last night, over this weekend Congress will forge a responsible path forward. House and Senate leaders will be working to find a bipartisan solution to significantly reduce Washington spending and preserve the full faith and credit of the United States."

Responding to that outline, Democrats and President Obama in repeated statements Saturday made clear that a two-step debt ceiling increase is not acceptable to them.

Reid was particularly blunt, blaming Republican intransigence for pushing the country to the brink of default.

"I am deeply disappointed in the status of negotiations with my Republican colleagues. I have said repeatedly, including last night and again today, that I will not support any agreement that fails to raise the debt ceiling though the end of 2012," Reid said in a statement Saturday night.

"I hope that Speaker Boehner and Leader McConnell will reconsider their intransigence. Their unwillingness to compromise is pushing us to the brink of a default on the full faith and credit of the United States. We have run out of time for politics. Now is the time for cooperation."

The dueling positions and public statements mask the fact that both sides are ready to agree to a two-step process, but the crucial sticking point, on which talks will likely focus is on the second debt ceiling increase.

In a conference call with Republican rank-and-file members after a meeting with President Obama and Congressional leaders Saturday morning, House Speaker John Boehner said he wants signs of significant progress on a package to raise the debt ceiling by 2 p.m. Sunday, before the Asian markets open. He told his members he is aware of the concerns that Asian markets could drop, if an agreement isn't close.

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