Reid to offer $2.7T deficit-cutting plan

Senate Majority Leader Harry Reid (D-Nev.) said Sunday he is drafting a $2.7 trillion deficit-reduction package that would raise the debt ceiling through 2012 after he said talks on a bipartisan deal “broke down” again with House Speaker John Boehner (R-Ohio).

The announcement raises the likelihood that the House and Senate will pursue separate proposals to lift the debt limit, with just eight days to go before a potential U.S. default after Aug. 2. If both chambers passed their own bills this week, it would leave little time for the measures to be merged and sent to the president before the Treasury Department runs out of money.

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Reid said his bill would meet the GOP’s criteria for approving a debt-ceiling increase: it would contain spending cuts that meet or exceed the additional authorization in federal borrowing, and it would not include new revenues — as Democrats have long demanded.

Reid’s statement follows an hour-long meeting he attended at the White House with President Obama and House Minority Leader Nancy Pelosi (D-Calif.). Separately, Boehner told House Republicans on a conference call Sunday afternoon that he hoped to present a revised debt-ceiling bill on Monday, with a vote possible Wednesday.

The House GOP bill could be a short-term extension, which Reid said would be “a non-starter” in the Senate.

“Tonight, talks broke down over Republicans’ continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support,” Reid said in his statement.

“A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner’s plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the president.”

He described his own effort as an attempt at a “bipartisan compromise.”