House unveils new debt bill

WASHINGTON (AP) — In a blunt challenge to President Barack Obama, House Republicans drafted legislation Monday to avert a potentially devastating Aug. 2 government default — but along lines the White House has already dismissed. U.S. and world financial markets shrugged off the uncertainty.

“This is a city where compromise is becoming a dirty word,” Obama lamented as congressional leaders groped for a way out of a looming crisis.

In stinging remarks a short while later on the Senate floor, the Republican leader, Mitch McConnell of Kentucky, urged the president to reconsider his position rather “than veto the country into default.”

According to a GOP aide familiar with the emerging House bill, it would provide for an immediate $1 trillion increase in the government’s $14.3 trillion debt limit in exchange for $1.2 trillion in cuts in federal spending.

The measure also envisions Congress approving a second round of spending cuts of $1.8 trillion or more in 2012, passage of which would trigger an additional $1.6 trillion in increased borrowing authority.

White House communications director Dan Pfeiffer called the proposal “not a serious attempt to avert default because it has no chance of passing the Senate.”

While the bill marked a retreat from legislation that conservatives muscled through the House last week, the two-step approach runs afoul of Obama’s insistence that lawmakers solve the current crisis in a way that avoids a politically charged rerun next year in the middle of the 2012 election campaign.

Without signed legislation by day’s end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could harm an economy struggling to recover from the worst recession in decades.

That deadline has set off an epic clash between the two parties, each side maneuvering for public approval and political leverage in advance of next year’s elections with the White House and control of Congress at stake.

House conservatives, many of them backed by tea party organizations, have provided the political muscle for the Republican drive to cut spending deeply in return for raising the debt limit.

But two rank-and-file Republicans said their constituents were voicing concerns other than the rising federal debt.

Rep. Tom Rooney, R-Fla., said his office is getting calls from constituents saying, “If I don’t get my Social Security check, it’s your fault.”