With eight days left until the Aug. 2 deadline set by the Treasury, Washington has yet to reach a compromise on increasing the debt ceiling. If a compromise isn't reached by Aug. 2, the United States could for the first time in history default on its debt.
After House Speaker John Boehner (R-OH) walked out of talks with President Obama on Friday, the two-parties negotiated over the weekend and bickered over a short-term extension. The Republicans offered one but the White House and congressional Democrats said they wanted a plan that would get the country past the 2012 elections.
At this point, the two parties have abandoned bi-partisan negotiations and gone their separate ways. So Boehner and Senate Majority Leader Harry Reid are crafting their own plans.
NPR's Cokie Roberts told Morning Edition host Steve Inskeep that the difference between the plans being crafted now and something like the "Cut, Cap and Balance" bill that House Republicans passed last week is that "the plans are ones that can be compromised."
Cokie said that realistically, it looks like this Congress will reach deal by the deadline; it looks like they "really mean it" when they say they don't want to put the full faith and credit of the United States at risk.
NPR's Andrea Seabrook added that right now the plans being crafted are sketchy, so there's no way to know exactly what is in them, but it's safe to say that the Republicans are working on a plan that would raise the debt ceiling enough to keep the country going until the end of the year, while Democrats are working on a plan that makes significant cuts and keeps the country going into 2013.
With that in mind, here are sketches of the plans:
-- USA Today reports Reid's plan would raise the debt limit by $2.4 trillion, while cutting $2.7 trillion in future spending.
-- Boehner's plan, reports The New York Times, would raise the debt ceiling, include $1 trillion in cuts and "that would be followed by future cuts guided by a new legislative commission that would consider a broader range of trims, program overhauls and revenue increases."
The Hill reports that the Senate Tea Party Caucus and House freshmen are discussing a plan B in case the deadline is not met. The bill would require "Obama to prioritize federal payments to the nation's creditors, Social Security recipients and soldiers serving in Afghanistan and Iraq."
Another thing to keep an eye on today is, of course, the markets. As Cokie told Steve this morning, in some ways it may take a plummet in the markets to force a compromise the way it did when Congress failed to pass TARP and the market went into free fall, dropping 700 points.
Early indications are that the markets are, indeed, reacting to the political impasse. As the markets opened, the Dow was down about 100 points, Nasdaq 18 or .63 percent and the S&P 500 was down 10 or .75 percent.