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Debt Deal Moving On to Plan B

Tom Williams/Roll Call

White House budget director Jacob Lew predicted Sunday that a catastrophic debt default would be averted.

“There will be a fringe that believes that playing with Armageddon is a good idea, but I don’t think that’s where a majority will be,” the director of the Office of Management and Budget said on CNN’s “State of the Union.”

Senate Minority Whip Jon Kyl (R-Ariz.) also predicted flatly that the debt ceiling would be raised with help from GOP Members, even if they don’t get the spending cuts they want.

“I don’t think Republican leaders will allow the country to go into default,” he said Sunday on ABC’s “This Week.”

Speaker John Boehner (R-Ohio) last week acknowledged that McConnell’s idea might “look pretty good a couple of weeks from now.” His deputy, House Majority Leader Eric Cantor (R-Va.), defended the Cut, Cap and Balance proposal Friday in a floor colloquy with House Minority Whip Steny Hoyer (D-Md.), but he also noted that he didn’t want to risk not raising the debt ceiling.

“I don’t want to pass Aug. 2 without increasing the debt ceiling. I understand there’s a lot of uncertainty if that were to happen, a lot of risk associated with that — risks I am not willing to take,” Cantor said.

The intraparty struggle is far from over, however. Conservative Sen. Jim DeMint (R-S.C.) pledged to lead a filibuster of the McConnell plan. “No Republican was elected to give President Obama more power and that’s what this plan does,” he tweeted Friday.

On Sunday, he dismissed the threat of a default on the debt if the Aug. 2 deadline passes without a deal.

On NBC’s “Meet the Press,” DeMint asserted that there would be plenty of money to pay the interest on the federal debt. “We’ve got to draw a line in the sand now, because the day of reckoning is going to come, and the longer we put it off, the bigger the problems are going to be for our country,” he said.

But Republicans, including Sen. John McCain (Ariz.), have acknowledged they don’t have the votes to pass a constitutional amendment — and they cannot allow a debt default.

Standard & Poor’s also warned last week that breaching the Aug. 2 deadline would lead to a “selective default” rating on the debt, even if interest payments are made, and that it likely would have severe short-term and long-term consequences.

Rep. Charlie Dent, a co-chairman of the Tuesday Group, said last week he supports the strategy put forth by leadership for now but thinks that a contingency plan needs to come together. “My fear is the balanced budget amendment won’t pass in both chambers, and then what?” the Pennsylvania Republican said.

And Sen. Mike Johanns (R-Neb.) said the pressure on Congress would ratchet up dramatically if the deadline is breached and Social Security and other payments are affected. “In the abstract, it’s awfully easy to make the case, ‘Well, I won’t raise the debt limit.’ The reality of that is that people suffer because of that decision. …That will change the whole dynamic overnight,” Johanns said.

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