Boehner, Reid Unveil New Debt Plans As Deadline Nears
Washington (CNN) -- Democratic and Republican congressional leaders unveiled new deficit reduction plans Monday as top officials scrambled to bridge a cavernous partisan divide and raise the federal government's debt ceiling before an unprecedented -- and potentially devastating -- national default.
Both plans provide a path to raise the debt ceiling through the end of 2012, but differ sharply in terms of their requirements for future congressional action and both tax and spending reform requirements.
President Barack Obama is scheduled to deliver remarks on the state of the negotiations at 9 p.m. ET, according to White House press secretary Jay Carney.
If Congress fails to raise the $14.3 trillion debt limit by August 2, Americans could face rising interest rates and a declining dollar, among other problems. As the cost of borrowing rises, individual mortgages, car loans and student loans could become significantly more expensive.
Officials also warn that, without an increase in the debt limit, the federal government will not be able to pay all its bills next month. Obama recently indicated he could not guarantee Social Security checks would be mailed out on time.
To defuse the crisis, Senate Majority Leader Harry Reid, D-Nevada, outlined a blueprint calling for roughly $2.7 trillion in spending cuts over the next decade while raising the debt limit by $2.4 trillion -- an amount sufficient to fund the government through next year's election.
Reid's plan would not require any new tax hikes and would not mandate any reforms to Medicare, Medicaid and Social Security, politically popular entitlement programs that are facing skyrocketing growth in costs.
Specifically, Reid's plan includes $1.2 trillion in savings from various domestic and defense programs, along with $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It also generates $400 billion in interest savings on the debt, and another $40 billion by rooting out waste, fraud and abuse.
Reid's proposal would establish a congressional committee made up of 12 House and Senate members to consider additional options for debt reduction. The committee's proposals would be guaranteed a Senate vote with no amendments by the end of the year.
Obama immediately endorsed the Reid plan. Carney called it a "responsible compromise ... that should receive the support of both parties." >>>CLICK HERE TO READ MORE
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