Sen. Mitch McConnell proposes a “last choice option” to raise the debt limit

Transcript of Sen. Mitch McConnell’s announcement of his proposed “last choice option” to raise the debt limit (7/12/11):
Well, hello everyone. Good afternoon. Sen. Kyl and I will be going down to the White House shortly for our daily meeting to discuss whether or not we’ll be able to come together and take advantage of the opportunity presented to us by the President’s request to raise the debt ceiling.

One thing that I just had the opportunity to brief my members on is a sort of last choice option. If we’re unable to come together, we think it’s extremely important that the country reassures the markets that default is not an option, and reassure Social Security recipients and families of military members that default is not an option.

Senate Republicans will be on the floor next week advocating a balanced budget amendment to require us to live within our means. All 47 Republicans are behind that proposal, and we hope to attract enough Democrats to pass it.

If the White House talks lead not to a conclusion that we can go forward together to reduce spending, which is our single biggest problem, then what is the alternative? So what I’ve told my members is that we will have available a sort of back-up plan that would operate as follows:

I would advocate that we pass legislation giving the President the authority to request of us an increase in debt ceiling that would take us past the end of his term. That is what he has said. He said he will not sign a debt ceiling that does not take us past the end of his term.

In this legislation, if it were to pass, he would make three separate requests of us: the first request would be initiated by passing the legislation in the next few weeks; he would send a request of us to raise the debt ceiling, probably about $700 billion. That would be subject to a resolution of disapproval.If you’re thinking of an analogy, think of the Congressional Review Act. That resolution of disapproval, if passed, would then go to the President, he could sign it or he could veto it. Presumably, he would veto it. If that is the case, that veto will be sustained by one-third plus one in either the House or the Senate. The legislation would also require him to list – it would not implement these cuts unilaterally – but would require him to list spending cuts he would make in the same amount as the debt ceiling request he is making of us.

Then there would be a second request, based upon his desire to have enough debt ceiling to get him through his term. There’ll be a second request in all likelihood in the fall. It would follow the same procedure. He would ask us to raise the debt ceiling. It’s highly likely that both Houses would consider and probably pass resolutions of disapproval, which if they passed, he would veto. His veto would be sustained by one-third plus one. That would happen one more time in June.

So this is again not my first choice. I had hoped all year long that the opportunity presented by his request of us to raise the debt ceiling would generate a bipartisan agreement, would begin to get our house in order by reducing spending. That may still happen. Still hope that it will. But we’re certainly not going to send a signal to the markets and to the American people that default is an option.

With that, let me turn to Sen. Kyl.

Sen. Jon Kyl (R-AZ):

Thank you, leader. Let me reiterate that it has been our hope and continues to be our hope that an agreement can be reached to avoid both a default and the final kind of procedure that the leader just announced.

When we began the conversations with Vice President Biden, I was quite hopeful that we could reach an agreement. But as you know, Rep. Cantor finally decided that we could not continue to participate at that level because the administration had, at the last meeting before then, made it clear that even minor savings in health care programs like Medicare. The kinds of things that you could imagine correcting: waste, fraud and abuse, collecting money that needs to be collected, or not paying benefits people are not eligible for. Those kinds of reforms, not fundamental reforms. Even those kinds of reforms, which we had agreed upon, would require offsetting tax increases or increases of taxes of the same amount. And that’s when we decided it was not productive to continue at our level, and the Speaker of the House and the President engaged.

What the leader and I have concluded after the meeting on Sunday, particularly the meeting yesterday, is that the administration is now even walking away from agreements that we had tentatively made during the discussion we had with Vice President Biden.

To be clear, there was an understanding that there would be no agreement on anything until everything was agreed to. But it is also the case that we had agreed on a significant amount of savings in the neighborhood of about $500 billion that – all else being equal – we could tell the American people that can be saved. When the administration walked away from much of that yesterday afternoon, it became clear to us that we’d better be thinking about an alternative in the event that we couldn’t reach an agreement. So that’s the reason for our desire to be able to move forward in the event our discussions down at the White House don’t bear fruit.

Question: Can you describe how the legislation would work in plain language?

McConnell: I don’t know how to describe it other than how it would operate. We would authorize him to request of us that we raise the debt ceiling for the amount that he says he needs. Because he says he will not make multiple [requests], that he wants enough debt ceiling increase to take to the end of his first term. He wants $2.4 trillion, and he says he won’t sign anything less than that. So taking him at his word, the way it would work is the legislation would authorize him to get to the amount that he says he needs, based upon the advice of his Secretary of the Treasury, in three tranches. The first tranche $700 billion; the second tranche $900; the third tranche $900 billion. Once the request is made, it would be appropriate in either or both Houses, for a resolution of disapproval to be taken up on an expedited procedure in both the House and the Senate. If the resolution of disapproval achieve a majority, it would go down to him and he could either sign it or veto it. My assumption is that he would veto it. That veto would be sustained by one-third plus one in either of the Houses. That’s the way it would work.

Question: Number one, I want to clarify the spending cuts that Obama would detail you said would be the same as the request?

McConnell: No, we would not give him unilateral authority to cut spending on his own. But we would ask him, we would require him to specify cuts he would make if he could commensurate with the amount that the tranche is asking for.

Question: How do you ensure that revenue raisers aren’t part of the equation that he would hand in?

McConnell: Because it’s specified spending cuts.

Question: Have you run through this with Speaker Boehner?

McConnell: I’ve spoken of that with others.

Question: Does this guarantee that you’ll get your spending cuts or not?

McConnell: No, it doesn’t, and as Jon Kyl has repeatedly reported to you in these endless discussions – the same endless discussions have gone on – we have become increasing pessimistic that we would be able to reach an agreement with the only person in America who can sign something into law and that is the President of the United States. This is not my first choice. My first choice is to get an agreement with the President to significantly reduce spending, and we’re going to continue to talk to them about that in the hopes that we can get there. Because that’s what we think is the single biggest problem.

Question: What I don’t understand is why would you agree – why would Republicans in the House – agree to essentially raising the debt ceiling without getting the spending cuts?

McConnell: Well, we’re not going to be a party to in the Senate, I’m pretty confident, is default. And the only way you can get an agreement that I think that can actually achieves something is when the President signs it. To actually reduce spending requires not just Republicans but a Democratic Senate and a Democratic president. We’re still hoping to achieve spending reductions that he will sign. That’s our first choice.

Question: The figure for all of this is $2.4, $2.5 trillion. How is this a better alternative than just dealing with that figure all at once right now?

McConnell: I think that it gives the President two more opportunities to focus on this problem and maybe reach an agreement with us. I’m not happy and I hope we don’t have to go to this option. I still want to cut spending. I was hoping he wanted to cut spending without extracting – as a condition for cutting spending – what we believe were job-killing tax increases. So that’s the discussion that continues. Jon Kyl and I are going down to it one more time this afternoon and whatever additional time the President requested. We’re hoping we’ll get somewhere.


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