Analysts: Senate plan saves $2.2 trillion

WASHINGTON (AP) - Budget analysts said Wednesday that a Senate Democratic plan to reduce the deficit and increase the nation's borrowing authority would save $2.2 trillion over a decade, more than a rival House Republican proposal but less than promised. With both bills stuck in neutral, Congress, financial markets and the public remained on edge days before the deadline for heading off a potentially calamitous default.

The Congressional Budget Office estimated that the plan by Senate Majority Leader Harry Reid, D-Nev., would result in savings of just over $2 trillion, some $500 billion less than Reid had promised. The Senate bill, however, would save more than a House Republican proposal by Speaker John Boehner, R-Ohio.

Nonpartisan congressional scorekeepers said his proposal would cut spending less than advertised, about $850 billion over 10 years, not the $1.2 trillion originally promised. The estimate, coupled with growing opposition from rank-and-file GOP conservatives, forced Boehner to postpone a scheduled vote on the bill to Thursday.

Republican and Democratic congressional leaders are scrambling to come up with an elusive compromise that could win the backing of President Barack Obama. The federal government faces a first-ever default absent a plan by Aug. 2, just six days away.

The CBO analysis of the Senate plan estimated that it would save $840 billion in non-war spending by government agencies. The analysis said it would reduce the government's interest payments by $375 billion over a decade. The bulk of the reductions would come from projected savings of $1 trillion from winding down wars in Iraq and Afghanistan.

Despite the stalled measures - and angry partisan rhetoric - the differences between the sides are narrowing, not widening. Boehner's plan represents significant movement from a bill the House passed last week, roughly half of its mandated spending cuts, for example. And Reid no longer is insisting on having tax increases as part of any plan to cut deficits.

Boehner needs to do more than pump up the legislation. He needs to shore up his standing with tea party-backed conservatives demanding deeper spending cuts to accompany an almost $1 trillion increase in the government's borrowing cap. Many conservatives already had promised to oppose it.

"We need more drastic cuts," said Rep. Jason Chaffetz, R-Utah. "I can't support it in its current form."

"I'm searching for a path toward yes but having a difficult time finding it," said Rep Bill Huizenga, R-Mich.

Unless he can wrestle the situation under control, Boehner risks losing leverage in his dealing with President Barack Obama and Democrats controlling the Senate.

Boehner's plan was not winning converts among some stalwart conservatives. It prompted Reid to declare that the bill was destined to fail in the Senate and it drew a White House veto threat. But it was framing the debate over how to reduce long-term deficits while raising the debt ceiling.

Tuesday's Congressional Budget Office analysis said the GOP measure would cut the deficit by about $850 billion over 10 years, not the $1.2 trillion originally promised. Even more embarrassing was a CBO finding that the measure, which would provide a $900 billion increase in the nation's borrowing cap, would generate just a $1 billion deficit cut over the coming year.

Boehner's plan would couple budget savings gleaned from 10 years of curbs on agency budgets with a two-track plan for increasing the government's borrowing cap by up to $2.7 trillion. The first increase of $900 billion would take effect immediately; the second increase could be awarded only after the recommendations of a special bipartisan congressional panel are enacted into law.

The White House says Boehner's measure would reopen the delicate and crucial debt discussions to unending political pressure during next year's campaigns and risk more uncertainty in the markets.

The White House promised to veto Boehner's measure if it were to reach Obama's desk.

It's unlikely to come to that. Reid, D-Nev., promised the measure would never make it through the Democratic-controlled Senate.

Reid held back on forcing a vote on his competing measure, which he unveiled Monday to poor reviews from Republicans like Senate Minority Leader Mitch McConnell of Kentucky. Reid appears to hope that his measure, which promises $2.7 trillion in spending cuts and would increase the debt limit enough to keep the government afloat past the 2012 elections, could emerge as the last viable option standing and could be modified with input from Republicans.

Those same Republicans blasted Reid's bill for $1 trillion in war-related savings they say are phony. But McConnell is emerging as a key figure in the endgame, and he sounded a conciliatory note in an appearance Tuesday.

"We need to get an outcome. And to get an outcome, a Republican House, a Democratic Senate and a Democratic president would have to reach an agreement," McConnell said. "So I'm prepared to accept something less than perfect, because perfect is not achievable."

One area of potential compromise could be how to treat the findings of a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid. Both Reid and Boehner support the idea, though Boehner wants to make a future increase in the debt limit contingent on the proposed additional cuts being enacted into law.

Meanwhile, the clock was ticking down to next Tuesday's deadline to continue the government's borrowing powers and avert possible defaults on U.S. loans and obligations, like $23 billion worth of Social Security payments due Aug. 3. The Capitol's telephones were jammed after Obama urged the public to contact their representatives in his Monday night address.

Conservative bloggers and groups like the Club for Growth, which funds primary campaigns against Republicans it deems too squishy in their conservatism, denounced Boehner's bill as too weak. The U.S. Chamber of Commerce, closer to the GOP mainstream, urged support.

While Boehner searched for votes, some Americans seemed to edge closer to the notion that the Aug. 2 deadline might pass without a solution. The stock market fell again, although not dramatically. California planned to borrow about $5 billion from private investors as a hedge against a possible federal government default.

The White House spoke with veterans groups about what might happen to their benefits if a deal isn't reached. Obama has said he can't guarantee Social Security checks and payments to veterans and the disabled would go out on schedule.

Freshman Rep. Trey Gowdy, R-S.C., bristled at the idea that tea party-influenced newcomers are sheep-like ideologues willing to risk default.

"We're not a bunch of knuckle-dragging, mouth-breathing Neanderthals," Gowdy said. "We're interested in answering what we perceive to be the mandate, which is to stop the spending and change the way Washington handles money."

Gowdy said he was leaning against Boehner's proposal.