Trillion-dollar question in debt-ceiling talks: What can pass the House?

President Obama and the Senate appear to be on the same page in debt-ceiling talks. But House Republicans are so far holding firm on their no-new-taxes demands.

Whatever deal emerges from White House debt-ceiling talks, the push to avoid a default comes down to what will fly in the GOP-controlled House.

Reports of an agreement between the White House and Speaker John Boehner (R) of Ohio surfaced on Thursday – and were promptly denied – but not before riling House members on both sides of the aisle, concerned that their side had given away too much.

House Republicans say that the ball is not in their court. Their “cut, cap, and balance” bill, which passed on a near-party line vote on July 19, proposed raising the debt limit, contingent on Congress’s passing a balanced-budget amendment to the US Constitution.

“What we think is that cut, cap, and balance is the only plan put on paper, the only plan debated, the only plan passed, the only plan with bipartisan support, and the only plan that can solve the problem,” says Rep. Jim Jordan (R) of Ohio, who chairs the 175-member Republican Study Group, the largest conservative group in the House GOP caucus. “That’s where we’re at.”

But "cut, cap, and balance" is heading nowhere in the Democrat-controlled Senate, where majority leader Harry Reid on Thursday dubbed it “weak and senseless,… perhaps the worst legislation in the history of this country.”

The Senate is set to vote on the bill on Friday, and the bill is expected to fall short of the votes needed for passage.

So with the House conservatives’ preferred option presumably off the table, the focus shifts to what House Republicans – and especially the volatile 87-member House freshmen class – can accept as an alternative.

In a surprise move, all but three GOP freshmen voted to raise the debt limit as part of the GOP “cut, cap, and balance” bill. More than two-thirds of GOP freshmen had campaigned against raising the national debt limit, now set at $14.3 trillion – prompting speculation that scores of freshmen were prepared to just say no to any increase of the debt limit, period.

In total, only nine Republicans refused to vote to increase the debt limit through "cut, cap, and balance."

“We don’t have to increase the debt ceiling,” says three-term Rep. Paul Broun (R) of Georgia, who voted against the bill. ”There are other ways to raise revenue without going into receivership," he adds, suggesting that the government could increase federal revenues by opening up energy reserves or selling unused federal buildings.

House Republican leaders have been meeting regularly with GOP caucus members to hear their views and, in some cases, expose them to information on the debt limit that shows how disruptive the nation’s first-ever default would be.

Last week, Jay Powell of the Bipartisan Policy Center met with the GOP caucus, showing members charts outlining “chaotic” consequences if Congress fails to raise the debt limit by Aug. 2.

The toughest issue blocking a deal on a debt-ceiling hike is taxes. Republicans are solidly opposed to raising taxes, and most Democrats oppose proposed cuts to entitlement programs without tax hikes, especially on the wealthiest Americans.

But Mr. Boehner on Thursday reaffirmed a commitment to tackle the debt limit without raising taxes. “It's not only important to avoid default, it's also important that we take a meaningful step toward real deficit reduction,” he said at his weekly press briefing.

“This means in addition to cutting and capping spending now, there should be real structural reforms to our entitlement programs, and there will be no tax increases,” he added.

Antitax crusader Grover Norquist, who heads Americans for Tax Reform, stunned lawmakers on both sides of the aisle when he was quoted in a Washington Post editorial on Thursday saying that letting the Bush tax cuts expire as scheduled in 2012 would not violate ATR’s pledge to oppose tax increases – a pledge that most House Republicans have taken.

“This is a development the significance of which should not be underestimated,” said Sen. Charles Schumer (D) of New York, responding to the editorial on the floor of the Senate on Thursday. “It is a recognition from Norquist that the House Republicans are increasingly isolated and have painted themselves into a corner.”

In a statement, Americans for Tax reform reaffirmed its antitax stance. “ATR has not altered either its policy positions or opposition to all tax increases whatsoever in any debt negotiations,” the statement read.

Asked about the controversy at his press briefing on Thursday, Boehner said: “I’ve never voted to increase taxes, and I don’t intend to.”

So while House Republicans are clearly softening on their opposition to raising the debt limit, raising taxes remains a nonstarter.

“The main concern Republicans have is that we have here is a spending problem, not a revenue problem,” says Michael Franc, who heads the Heritage Foundation’s outreach to members of Congress.

"Anything that is a traditional form of tax increase will be a nonstarter. That’s a theological difference between Republicans and Democrats,” he adds.

The Republican caucus meets Friday morning to discuss the status of talks and then is expected to be out of town until Monday.