Debt crisis: Senate cancels holiday leave, but will it accomplish anything?

Heeding a call from the White House, the Senate canceled its July 4 break next week to stay in session and resolve the nation’s looming debt crisis, now set to hit on Aug. 2.

“The time is too short to waste even a moment,” said Senate majority leader Harry Reid (D) of Nevada, making his announcement on the Senate floor Thursday.

“If we didn’t pay our bills, it would plunge the United States not into a recession, not into the so-called double-dip recession, but into a full-blown depression – and that’s without a doubt,” he added.

But so far Democratic leaders are planning no meetings with Republicans and the agenda on the Senate floor is expected to be the US role in Libya.

Until Thursday’s announcement, the House and Senate had planned to be in session at the same time only nine days between now and Aug. 2. House leaders say that they, too, are open to stay in session throughout the month of July.

“As always, the House will be here if and when needed, whether that’s the week of July 18 or the week of August 8,” says Laena Fallon, press secretary for House majority leader Eric Cantor (R) of Virginia.

“Today is a triumph of common sense in Washington, D.C., and that is no small feat,” said Kiki McLean, a founding leader for No Labels, a bipartisan advocacy group that has been pushing for Congress to suspend breaks until the debt crisis is resolved.

In a press conference on Wednesday, President Obama chided Congress, especially Republicans, for delays on his request to raise the nation’s $14.3 debt limit before the nation runs out of borrowing capacity.

Republicans are refusing to vote to increase the debt limit unless Congress and the president agree to trillions of dollars in spending cuts in the federal budget.

“If by the end of this week we have not seen substantial progress, then I think members of Congress need to understand we are going to, you know, start having to cancel things and stay here until we get it done,” Mr. Obama said.

On Aug. 2 the Treasury expects to reach the limit it is allowed to borrow in order to pay for government expenditures, including interest payments on existing debt. If the United States defaults on debt payments, its creditworthiness will plummet and interest rates will soar, further damaging an already vulnerable economy.

The Bipartisan Policy Center in Washington estimates that as of Aug. 3, the US would have $12 billion in new revenues to cover $32 billion in committed spending.

In a bid to make progress on debt talks, Reid is planning a series of meetings with the Democratic caucus next week. On July 5, Budget Committee chair Kent Conrad (D) of North Dakota will “come up with a way to move forward on the budget,” Reid told reporters Thursday. On July 6, Democrats will invite President Obama and Vice President Biden to meet with their caucus. On July 7, Democrats will meet with the president’s economic team, led by Gene Sperling, director of the White House National Economic Council.

But Republicans protest that none of these meetings include them. Rather than debating a resolution on Libya, Republicans say the Senate should be taking up issues related to raising the debt limit on the floor next week, such as a balanced budget amendment to the Constitution.

“We should be talking about what Americans saw we should be talking about, which is the debt,” says Sen. Rand Paul (R) of Kentucky, after Thursday's announcement that the Senate will be in session but not necessarily talking about debt.

“If you’ve got a serious issue before you, that’s the issue you should focus on, but that’s not what we’re doing,” says Sen. Bob Corker (R) of Tennessee.

“It’s been 792 days since we’ve had a budget,” said Sen. Kelly Ayotte (R) of New Hampshire. “I was so excited as a new member of the Budget Committee to roll up my sleeves and put together a responsible blueprint for this country, but we were told by the majority leader that this would be foolish.”

Bipartisan debt talks led by Vice President Biden derailed last week after GOP negotiators, majority leader Cantor and Senate minority whip Jon Kyl of Arizona, walked out in protest over calls by Democrats for tax increases. The solution to the debt crisis in a recession must be spending less, not taxing more, Republicans say. Moreover, a tax increase couldn’t pass the House, so it’s a political nonstarter, they add.

Senator Conrad isn’t releasing details of the FY 2012 budget plan he will present to the Democratic caucus next week, but aides say that elements have already been reported in the press. These include: at least $4 trillion in deficit reduction over 10 years, 50 percent to come from spending cuts and 50 percent from tax increases. The plan is also expected to use savings from cutting tax loopholes to lower tax rates for all but the highest income Americans.