House to Hold Symbolic Debt Vote on 'Cut, Cap and Balance'

Defying a White House veto threat, U.S. lawmakers were set to vote Tuesday on a Tea Party-backed plan requiring draconian cuts in government spending as the price to avert a ruinous early-August debt default.

The Republican-led House of Representatives was to take up a "Cut, Cap and Balance" blueprint to raise the U.S. debt limit, brushing off warnings that the measure is nearly sure to be dead on arrival in the Democratic-held Senate.

Time Running Out

The mostly symbolic vote comes with time running out for the White House and polarized lawmakers to reach a deal to raise the U.S. debt ceiling by Aug. 2 or risk a catastrophic debt default with far-reaching global consequences.

President Obama's budget office on Monday threatened to veto the blueprint and urged Republicans to drop their "empty political statement and unrealistic policy goals" in favor of a compromise with his fellow Democrats.

Republican House Speaker John Boehner called the threat "disappointing" and warned: "If we are going to raise the debt limit and avoid default, the White House must be willing to demonstrate more courage than we have seen to date."

The plan notably ties any increase in the debt ceiling to securing the two-thirds majorities needed in each chamber to send an amendment to the U.S. Constitution requiring a balanced federal budget to the states for ratification.

Washington hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally, but can only do so until Aug. 2.

Finance and business leaders have warned that failure to raise the U.S. debt ceiling by then could send shock waves through a world economy still reeling from the 2008 collapse, while Obama has predicted economic "Armageddon."

Reid-McConnell Compromise Bill in the Works

Away from the political limelight, Democratic Senate Majority Leader Harry Reid and Republican Senate Minority Leader Mitch McConnell were crafting a compromise bill that would give Obama broad powers to raise the debt ceiling.

The blueprint, described last week by aides who warned it was still in flux, would effectively let Obama do so with just Democratic votes while letting Republicans oppose the move with political but few practical consequences.

The plan would also call for as much as $1.5 trillion in spending cuts over ten years and set up a special commission of lawmakers empowered to propose more cuts that would get streamlined congressional consideration.

White House spokesman Jay Carney said Obama still hoped to combine deep deficit cuts with a debt-limit increase in "the biggest deal possible" but suggested the president could back the "last-ditch" Reid-McConnell plan with time running short.

"Why don't we wait and see how things look in a few days, or maybe even on Friday," said Carney.

Republicans close to the Tea Party movement have angrily condemned the compromise but appeared unable to block it.

Obama, who held unannounced White House talks Sunday with Boehner and Republican House Majority Leader Eric Cantor, said Monday that talks were "making progress."

"The lines of communications are being kept open. But there is nothing to report in terms of an agreement or progress," Boehner communications director Kevin Smith said.

Republican Sen. Tom Coburn, meanwhile, on Monday unveiled his own plan intended to slash the federal deficit by $9 trillion over the next decade.

The plan would yield $2.6 trillion in savings through changes to entitlement programs such as Medicare, cut $1 trillion in defense spending, and generate another $1 trillion in savings through tax reform.

"I have no doubt that both parties will criticize this plan, and I welcome that debate," Coburn said. "But it's not a legitimate criticism until you have a plan of your own."

Poll: Public Disapproves of Washington's Handling of Crisis

As a new poll showcased deep public disgust with politicians' handling of the standoff, Treasury Secretary Timothy Geithner sought to reassure skittish markets that polarized Washington would rally behind an 11th-hour deal.

"Despite what you hear -- and this is a complicated place, Washington -- people are moving closer together," he told CNBC television, saying a default would bring the world economy to "the edge of recession."

Reid announced that the Senate would be in session every day, including weekends, until it passes legislation to raise the debt ceiling.

Obama, whose 2012 reelection bid will turn on his handling of the economy, won good marks from just 43% of the public for his approach to the debt standoff, while 48% disapproved, according to a CBS television poll.

But he fared better than Republicans, who faced 71% disapproval to just 21% approval for their role in the political struggle, according to the survey.