Senate Majority Leader Harry Reid speaks to the media after meeting with… (Yuri Gripas / Reuters )
Reporting from Washington — A plan by the Senate's two top leaders to allow President Obama to raise the debt limit without congressional approval is emerging as the most likely strategy to avoid a looming federal default.
The plan being drafted by Senate Minority Leader Mitch McConnell of Kentucky and Majority Leader Harry Reid of Nevada would lock in about $1.5 trillion in deficit reduction over the next 10 years — a figure considerably smaller than Republican leaders and Obama had been seeking.
Administration officials have said they still would prefer a more sweeping deal on the deficit, but they signaled the idea would be acceptable to Obama.
Conservatives, particularly in the House, seem likely to oppose it. But with efforts to deliver a larger deficit-reduction deal still at a stalemate, the new plan — which builds on a proposal put forward earlier in the week by McConnell — could provide a way out of a dead end that has become politically and economically perilous.
House Speaker John A. Boehner (R-Ohio) indicated that such "last-ditch" efforts could become more palatable in the time ahead.
"What may look like something less than optimal today, if we're unable to get to an agreement, might look pretty good," Boehner said.
House Majority Leader Eric Cantor (R-Va.) toned down his hard-line stance Thursday, saying, "There is a dose of pragmatism in all that we do."
The plan came as Treasury Secretary Timothy F. Geithner told reporters after a private lunch meeting with Senate Democrats that "we're running out of time" for debate. The nation's bond rating, and with it the financial stability of the nation, hinges on the ability of Congress and the White House to approve more borrowing before the government begins running out of cash on Aug. 2, he said.
Underscoring Geithner's warning, the government of China, which is one of the largest holders of U.S. debt, issued a statement urging American officials to act "responsibly."
Congressional leaders met at the White House for a fifth straight day Thursday. There were no plans for a session on Friday, but Obama gave congressional leaders 24 to 36 hours to evaluate options. The president said he and his staff were willing to meet over the weekend.
Under the emerging proposal, Obama would be able to order increases in the debt ceiling on his own, without congressional approval.
Congress would vote on legislation to block an increase, but if such a resolution passed, as is likely, Obama would veto it. If the veto were sustained by Congress, the debt limit would be increased.
Republican strategists think that scenario would force Obama to take full political responsibility for the rising national debt, a prospect that White House spokesman Jay Carney said Obama could live with.
"The president is willing to take responsibility for leading, and he is willing to do what it takes to compromise to reach something significant, and he is willing to own it, if other people won't," Carney said. "We have to raise the debt ceiling, because the United States is the United States and it does not default on its obligations."
Thursday's developments came as a new poll indicated that voters would be more likely to blame Republicans than Democrats if a failure to increase the debt limit led to a default on federal obligations. The same survey, by Quinnipiac University in Connecticut, found that by a 2-1 margin, voters polled still blamed former President George W. Bush over Obama for the state of the economy.
The Senate proposal, however, falls far short of the demands being made by conservative Republicans in the House, where its chances for success are unclear.
Republicans have insisted on at least a dollar-for-dollar swap of spending cuts to approve an increase in the country's borrowing limit. That means about $2.4 trillion in spending cuts would be needed to cover the increase in borrowing authority that Treasury officials estimate is required through next year.
McConnell's initial offer was roundly criticized by conservatives because it failed to lock in the spending reductions. Under the new proposal being shaped, a specific level of cuts would be locked in as part of the deal, according to congressional aides.
What remained uncertain in the proposal that was emerging was whether Congress would vote more than once, as the GOP prefers, forcing Obama to request multiple debt ceiling increases well into the 2012 election year.
The proposal also could include formation of a bipartisan congressional commission to recommend future budget reforms, including possible changes to entitlement programs or tax policy, that would be subject to an up-or-down vote in both chambers.
GOP aides cautioned that several alternative scenarios were being floated as leaders struggled to find enough votes to pass a bill.
Congressional aides said that unless talks between the White House and congressional leaders suddenly yielded an unexpected deal in coming days, Reid and McConnell would bring their proposal to the Senate floor, possibly as soon as next week.
Proponents hope that passage by the Senate, combined with lobbying by business groups, would create sufficient pressure for House passage.
"We don't have it worked out yet, but it's something that we're looking to," said Reid, who had been working on the scenario with the Republican leader for the last several days.
Staff writers Christi Parsons and Peter Nicholas in the Washington bureau contributed to this report.