Hopes for a bipartisan debt deal by Sunday are going from slim to none. CBS News reports that after a Republican deadline for reaching a deal "came and went late this afternoon," President Obama invited top Democrats Harry Reid and Nancy Pelosi to a White House meeting Sunday night, but no Republicans. It seems now that the two parties are going to go it alone.
Politico reports that Harry Reid "began to draft his own legislation Sunday that would slash at least $2.5 trillion to match an extension of the nation’s borrowing limit through the 2012 election." Politico comments that "to get the plan enacted before Aug. 2, Reid would have to start the process in the Senate for moving the bill within the next couple days. There is little margin for error to enact the legislation within that timeframe." Tonight's White House meeting ended just after 7 p.m., and according to reports, the Democratic officials discussed their continued opposition to a two-step debt limit increase.
On the other side, Speaker John Boehner told his GOP colleagues in a Sunday afternoon conference call that a debt deal with Obama is not the way forward. Going into Sunday night, Politico reports, he "was still pursuing a two-stage, $3 trillion-plus package that would raise the debt ceiling in increments, by $900 billion first and then by about $1.6 trillion next year." The new approach is "going to require some of you to make some sacrifices," he said during the call. National Journal reports that Boehner is prepared to offer a deal to raise the debt limit for six months, assessing that the House and Senate might proceed with that package together without the president’s sign-off.
Update: However, in a Sunday night statement, Senate Reid said that: "Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi, and I have been clear we would not support." He added:
A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President.
As to the Democrat's current strategy, he said:
In an effort to reach a bipartisan compromise, we are putting together a $2.7 trillion deficit reduction package that meets Republicans' two major criteria: it will include enough spending cuts to meet or exceed the amount of a debt ceiling raise through the end of 2012, and it will not include revenues. We hope Speaker Boehner will abandon his 'my way or the highway' approach, and join us in forging a bipartisan compromise along these lines.
The reason for the pressure to come up with a plan on Sunday was to prevent a panic as the markets opened in Asia. And how is the market taking this (lack of) development? Reuters reports that the initial reaction as Asian financial markets opened was "mild":