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Senate Democrats Work on Own Debt Plan

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Senate Majority Leader Harry Reid said his deficit plan wouldn’t raise revenues and would cut spending equal to the amount the debt ceiling would be raised through the 2012 elections.

Updated: 10:55 p.m.

With just more than a week left to raise the nation’s debt ceiling, Senate Democrats prepared Sunday to release their own debt plan that would include $2.7 trillion in savings with no added revenues, Majority Leader Harry Reid (D-Nev.) said.

The move from Democrats to offer their own plan, as opposed to waiting for Speaker John Boehner (R-Ohio) to send them a package of his choosing, follows a Saturday night meeting where Reid “offered a range of possibilities” for raising the debt ceiling in two steps — an approach favored by Boehner — only to be rebuffed by the Speaker, according to Democratic sources.

The news of a separate track, and the potential for dueling bills in the week leading to the Treasury’s Aug. 2 default deadline, came mere hours before an Oval Office meeting among Reid, House Minority Leader Nancy Pelosi (D-Calif.) and President Barack Obama. The president received an update on the negotiations, and the three reaffirmed their opposition to a short-term debt limit increase, according to a White House official. A Hill Democratic source seconded the leaders’ opposition to a short-term deal while adding that the pursuit of Reid’s $2.7 trillion plan “looks likely.”

Reid confirmed Sunday night that he was working on a plan, details of which had leaked out earlier in the day. In a nod to Republicans, the measure would equal the size of a debt limit increase through the end of 2012 and would not include revenues, Reid said in a statement, while top aides said it would make minimal changes to entitlement programs.

Reid also accused Boehner of pursuing a short-term debt deal in disguise, which he said would be a non-starter for the Senate and the president.

In order to achieve the $2.7 trillion figure, it’s possible Democrats will factor in savings from projected wind-downs in the American missions in Afghanistan and Iraq, a source confirmed. Pelosi had mentioned using this sort of accounting in a luncheon question-and-answer session with progressive reporters earlier in the week. How much savings the Congressional Budget Office would calculate based on these assumptions, however, is in dispute.

Democratic leadership aides said Reid would inform his members of the new plan after his meeting with Obama on Sunday. If they were on board, he would then present the plan to Republicans.

A top aide said, “Any path forward on a two-step solution would require the Speaker to revisit our offers from last night, but based on estimates that have already been provided by the Congressional Budget Office, we’re confident we have a package that would provide [$2.7 trillion] in cuts.”

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