A day after talks between President Obama and House Speaker John Boehner abruptly collapsed, congressional leaders worked overtime on Saturday to craft a deal that can raise the $14.3 trillion federal debt limit and staves off a looming market panic.
After an evening of high drama in sweltering Washington, Obama summoned Boehner and three other top congressional leaders — Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell, as well as House Minority Leader Nancy Pelosi — to an 11 a.m. meeting at the White House. The participants, whose “strained body language suggested a school principal’s office,” according to a pool reporter ushered in for a glimpse, lasted for 50 minutes and ended without an agreement. The congressional bosses, minus Obama, met again in a conference room in the Speaker’s offices at the Capitol in the late afternoon.
In between the two summits, Boehner held a conference call with the House Republican conference. Time, Boehner explained, was running short. With 10 days before the U.S. faces the prospect of default and the chain of economic calamity that would attend it, Boehner told colleagues he hoped to announce an agreement by Sunday afternoon, to assuage Asian financial markets poised to tumble in the absence of a plan.
Lawmakers are working on a two-part solution to the crisis: a package of spending cuts, estimated to be about $1 trillion, followed by the establishment of yet another deficit-reduction commission tasked with pinpointing additional savings over the next decade. The Speaker wants to bring a bill before the House on Monday to facilitate a Wednesday vote. (He promised at the outset of his speakership to post a bill online 72 hours before a vote, to allow sufficient time for members to peruse it.) That would leave barely enough time for the Senate to take up and pass the measure before the Aug. 2 deadline.
While both sides say they are confident a deal can be reached, the fireworks on Friday, when Obama and Boehner held dueling, testy press conferences to blame each other for scuttling a solution, were a depressing reminder that Washington runs according to Murphy’s Law. The President blasted his counterpart for walking away from an “extraordinarily fair deal”; the Speaker accused the White House of “moving the goal posts.” Boehner’s office said that Obama, facing blowback from Capitol Hill Democrats, had upped his demand for the amount of revenue the deal would include by 50% and backed away from proposed changes to Social Security. Meanwhile, Obama hinted that Boehner was a captive of his fractious conference. “Can they say yes to anything?” he asked repeatedly.
The resurrection of a deal would be a striking turnaround from the recriminations of Friday evening. As ever, significant obstacles loom. Boehner has indicated he is still pursuing the kind of big deal totaling upward of $3 trillion in spending cuts, according to reports, that he and Obama have twice failed to fashion. Absent a breakthrough, however, the GOP, which has insisted on dollar-for-dollar deficit reduction that matches the size of the debt limit increase, will seek a smaller, shorter-term deal. And the prospect of a short-term hike collides with Democrats’ insistence that the deal extend the U.S. borrowing authority into 2013. Reid said on Saturday that, like Obama, he does not support a short-term hike in the debt limit, which would force lawmakers to repeat the painful exercise amid the heightened partisan tensions of the 2012 election. “I will not support any agreement that fails to raise the debt ceiling though the end of 2012. Anything less than that will fail to provide the certainty that the markets – and the world – are looking for, risking an immediate downgrade of America’s credit rating,” Reid said in a statement that blistered Republicans’ “intransigence.”
Boehner’s office shot back a statement blaming the Democrats for dithering. “We have passed a debt limit increase with the reforms the American people demand, the ‘Cut, Cap, and Balance’ bill. The Democrats who run Washington have refused to offer a plan. Now, as a result, a two-step process is inevitable,” a spokesman said Saturday night.
Members of both parties told TIME on Friday that they expected a stopgap fix would be necessary, if only to buy time for Congress to craft a solution. “We do not know what size or shape a final package will take, but it would be terribly unfortunate if the President was willing to veto a debt limit increase simply because its timing would not be ideal for his re-election campaign,” a GOP aide said in a statement on Saturday morning. Whatever the size or shape, Congress will have to act quickly to avert a crisis of its own choosing.
Alex Altman is a Washington correspondent for TIME. Find him on Twitter at @aaltman82. You can also continue the discussion on TIME‘s Facebook page and on Twitter at @TIME.