Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., met at the White House for a meeting at 6 p.m. that lasted a little more than an hour. The meeting started an hour after the first of the Asian global markets opened. House Speaker John Boehner, R-Ohio, on Saturday had asked for a debt framework before then, intended to give the Asian markets time to process a last-ditch bid to ward off the market turmoil.Geithner Proposes "Powerful Special Committee to Devise a Blueprint for Additional Savings"
Reid is taking a proposal for "at least" $2.5 trillion in spending cuts as part of a debt-ceiling deal, seeking Obama's approval, according to an aide.
Both Reid and Boehner are advancing plans to raise the debt ceiling. The biggest difference is that the Reid plan would increase the borrowing limit through at least the November 2012 election, while the Boehner proposal would have two stages ? with the debt ceiling increase coming early next year and allowed only if matching spending cuts are enacted. Democrats have said that carrying the borrowing authorization past the election is a make-or-break provision. Republicans want two votes, saying they hope to wring more savings.
In a conference call with rank-and-file GOP House members on Sunday afternoon, Boehner said the House and Senate were nearing agreement on a six-month solution, according to one participant.
Boehner said he was ready to proceed with that short-term deal, without Obama's sign-off, the participant said.
In the conference call, Boehner asked for support. He said compromises were necessary, but he promised to use the ?Cut, Cap, and Balance? amendment as a basis for any compromise, according to a source familiar with the call.
Pointing out that the Senate had brushed aside the Cut, Cap and Balance amendment, Boehner said: ?So the question becomes ? if it?s not the Cut, Cap, and Balance Act itself ? what can we pass that will protect our country from what the president is trying to orchestrate?"
But the more Boehner?s plan relies on House GOP support, the less likely it would be to clear the Senate. Democrats in the House, Senate, and White House have all signaled unwillingness to sign off on a debt-ceiling hike that does not carry into 2013. Obama has vowed to veto an extension of borrowing authority that does not last into 2013 -- after the presidential election.
Geithner laid out two paths: a two-tiered approach involving a savings package followed by a tax code and entitlement reform, and another option that hews to the one-swipe ?grand bargain? that Obama and Boehner had been hashing over before talks fell apart late on Friday.
The first and more likely path could establish a powerful special committee to devise a blueprint for additional savings and revenues, fanged with deadline authority and tools to circumvent the traditional legislative byways.
Not only did Geithner propose something idiotic, he called it a "likely path". What planet is Geithner living on?
As for the Republicans, the least they can do it put Obama to the test. Pass a six month extension and see if Obama vetoes it.
Addendum:
The "Super Committee" idea is actually the hare-brained scheme of Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid. Geither was merely dumb enough to latch on to it.
Please see Sea of Red in Asia, China Down Nearly 3 Percent; New Record High for Gold; "Super Committee" is Super Idiocy for details.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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