The House is expected to vote on the GOP debt-ceiling plan today, a plan that Senate Majority Leader Harry Reid says will be dead on arrival in that body.
The S&P 500 has fallen three days in a row, but is currently up about a half-percent now, with two hours left in trading.
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WASHINGTON (AP) -- Hours before a crucial vote, Republican leaders pleaded with their fractious rank and file Thursday to support a House plan to stave off an unprecedented government default. The vote would bring President Barack Obama and congressional leaders a step closer to endgame efforts before Tuesday's deadline.
Republicans are seeking deep spending cuts in exchange for raising the nation's $14.3 trillion debt limit to allow the government to keep paying its bills. The White House has threatened to veto the GOP bill if it makes it through the Democratic-controlled Senate. Still, getting the newly modified House plan passed on Thursday was seen as an important step toward finding a compromise -- possibly in the Senate.
Rival plans by House Speaker John Boehner and Senate Democratic leader Harry Reid have enough in common -- including the establishment of a special congressional panel to recommend additional spending cuts this fall -- that Reid has hinted a compromise could be achievable.
As debate got under way in the House, Reid said the Senate would vote on the GOP bill as soon as the House finished late Thursday -- and predicted it would fail in his chamber.
"No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now," Reid said.
Earlier in the day, in a closed-door GOP meeting, Boehner, R-Ohio, made headway in securing the 217 votes necessary to pass his plan. No Democrats were expected to support it. Boehner told the Republicans he expected to round up enough votes but was not there yet.
"But today is the day," he said, according to people in the room.
Some lawmakers were climbing onboard, though sometimes grudgingly.
"I think it's the best deal we can get," said Rep. Steve Chabot, R-Ohio, who said he had dropped his opposition. Rep. Walter Jones, R-N.C., said he would back the measure to ensure that Boehner "has a seat at the table" for the final negotiations.
Critical to Boehner is support from his chamber's 87 freshmen, who lifted the GOP to its House majority last November, many of them with tea party support from the right. More than a dozen freshmen told reporters that a significant number of their class were now backing Boehner's plan
"It is not a perfect plan, certainly, but it is a good step forward," said Rep. Tim Griffin, R-Ark., one of the newcomers.
The White House expected Boehner to rally enough Republicans for the measure, with adviser David Plouffe saying it will "pass out of the House in partisan fashion." The House has 240 Republicans and 193 Democrats with two vacancies. Boehner can only afford to lose two dozen members.
Wall Street warily watched the bitter standoff in Washington. Stocks rose modestly Thursday, based in part on a strong jobs report. A day earlier, nervous investors sent the Dow Jones industrial average down almost 200 points, on top of a 92-point drop a day earlier.
The Treasury Department moved ahead with plans to hold its regular weekly auction of three-month and six-month Treasury securities on Monday. The department said it would provide additional information on how it would pay its bills if the deadline should pass without an increase in the nation's borrowing authority.
While the Boehner and Reid measures differ in key details, they also share similarities that underscore the concessions made by the two sides in recent days. Reid's bill does not envision a tax increase to reduce deficits, a bow to Republicans. But neither does the House measure require passage of a constitutional balanced budget amendment for state ratification, a step in the direction of Obama and the Democrats.
At the White House, spokesman Jay Carney said, "What a compromise looks like is pretty clear: significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform, and a lifting of the debt ceiling beyond -- into 2013, so that we do not have the cloud of uncertainty that is hanging over our economy right now."
In the House, Boehner made headway with balky conservatives unhappy that the measure contains smaller spending cuts than a more-stringent debt measure that passed the House last week. The new measure depends on caps on agency budgets to cut more than $900 billion from the deficit over the coming decade while permitting a commensurate increase in the nation's borrowing to allow the government to pay its bills.
Boehner argued that the measure represented "the best opportunity we have to hold the president's feet to the fire. He wants a $2.4 trillion blank check that lets him continue his spending binge through the next election. This is the time to say no." Boehner made the comments Wednesday to conservative radio host Laura Ingraham.
The White House threatened a veto, saying the bill did not meet Obama's demand for an increase in the debt limit large enough to prevent a rerun of the current crisis next year, in the heat of the 2012 election campaign.
"It's inconceivable to me that the president would actually follow through on this threat," Senate Minority Leader Mitch McConnell, R-Ky., said Thursday.
McConnell accused Democrats of "playing with fire" in planning to block the Boehner proposal in the Senate.
Obama supports an alternative drafted by Reid that contains comparable cuts to agency operating budgets but also claims savings from lowball estimates of war costs. Reid's plan would provide a record-breaking $2.7 trillion in additional borrowing authority, enough to tide the government over through 2012. Reid, however, is plainly short of the votes needed to overcome a GOP filibuster.
Unless Congress acts by Tuesday, administration officials say, the government will not be able to pay all its bills. They include $23 billion in Social Security benefits due Aug. 3, an $87 billion payment to investors to redeem maturing Treasury securities and more than $30 billion in interest payments that come due Aug. 15.
Treasury Secretary Timothy Geithner and other officials warn that a default could prove catastrophic for an economy still recovering from the worst recession in decades. But some skeptics, including conservative Republicans like Sen. Pat Toomey of Pennsylvania, say Geithner can manage Treasury's cash flow to avoid a catastrophe if Congress fails to act.
House Republicans tweaked their measure Wednesday to enhance its prospects of passage after a worse-than expected cost estimate from congressional budget analysts on Tuesday. The changes were modest, but under arcane budget conventions, they brought projected savings for 2012 to $22 billion, part of a 10-year cut of $917 billion. That would trigger a $900 billion increase in the debt limit.
For Boehner, the vote shaped up as a critical test of his ability to lead a fractious majority that includes 87 first-term lawmakers, many of them elected with tea party support. Passage also was imperative to maximize Boehner's leverage with Obama and Reid in a fast-approaching endgame.
Boehner showed fire in a meeting Wednesday with the Republican caucus.
"Get your ass in line," Boehner told the rank and file. "I can't do this job unless you're behind me."
The speaker still faced resistance.
Rep. Louie Gohmert, R-Texas, said he is still "a beat up no" vote after Thursday's session.
Plouffe was interviewed on MSNBC.