Zero Hedge
July 30, 2011

As expected, the revised revised Boehner plan has passed the Congress garnering the required 216 votes to be successful (218-210 to be precise). And now that the ball is in the Senate’s court, here is was happens over the next 3 days…

Via Nancy Vanden Houten of Stone McCarthy.

Majority Leader Reid today set the wheels in motion for the Senate to begin consideration of the House bill, assuming it passes, or his own debt ceiling/deficit reduction plan.

Our understanding of the procedures in the Senate is pretty basic, but the bottom line seems to be that the soonest we would see any meaningful vote in the Senate would be shortly after midnight on Saturday (i.e. early Sunday morning.) It’s not clear to us whether that initial vote would be on some version of the House bill, Reid’s original proposal, or Reid’s proposal modified based on recommendations from Minority Leader McConnell. Without Republican input on the legislation, the odds of filibuster go up. People with more knowledge of the workings of the Senate than we have are looking for another procedural vote on Monday morning, and a final vote on some piece of legislation on Tuesday (August 2.)

Putting the logistics of the Senate aside, Reid is going to have to make some adjustments to his bill to get enough Republican support so that Republicans don’t block legislation through filibusters or other tactics.

• A d v e r t i s e m e n t
• {openx:49}

Assuming Reid can get the Senate to pass some piece of legislation, some compromise will still have to be worked out with the House. If Speaker Boehner wants to be part of a compromise that prevents default, he’s going to have to shift gears in a major way. In the last couple of days, he’s been working overtime to get support for his bill from members of his own party. If he wants to push through compromise legislation, he’s going to have to court some Democrats, because he’ll surely lose Republican votes on any compromise with Democrats.

As we noted in our comment Monday, the original Boehner and Reid plans had enough in common to suggest grounds for compromise.

The biggest stumbling block will continue to be the House bill’s provision that calls for the debt limit to be increased in two steps, with the first increase only lasting through the end of this year or early this year. We don’t think Senate Democrats and the White House would concede to that. As we noted in our update Monday, both the original House and Senate bills call for a new Congressional committee to make recommendations for long-term deficit reduction. The House bill made the second increase in the debt limit contingent on Congress adopting those recommendations. There are no consequences for failing to adopt the committee’s recommendations in the Senate bill.

We think Senate Democrats would agree to adding some mechanism to their bill to force the adoption of the Committee’s recommendations. Indeed, President Obama said today he could support some sort of enforcement mechanism if it was “smart and balanced.” We don’t think Democrats would support the enforcing mechanisms in either version of the House bill — i.e. making a debt limit increase dependent on Congress adopting the new committee’s deficit reduction recommendations in the first bill, or Congress adopting a balanced budget amendment in the latest version. However, Senate Democrats do seem open to requiring a vote on a balanced budget amendment as part of a compromise.

The bottom line: To get legislation to raise the debt limit, some bi-partisan cooperation will be required. Senator Reid will need to work with Republicans to move a bill through the Senate, and House Speaker Boehner will need to start wooing Democrats because he’s sure to lose Republican votes for any legislation that makes some concessions to Democrats. Given the procedures in the Senate, this isn’t likely to be resolved before Tuesday. If the two sides are making progress, we think there is a good chance we would see a very short-term increase in the debt ceiling lasting for a matter of days.

The Emergency Election Sale is now live! Get 30% to 60% off our most popular products today!