Tea Party threatens to forsake GOP over debt deal

Erica Hill talks to CBS News chief Washington correspondent Bob Schieffer about the issues behind the debt ceiling debate.

Debt ceiling debate coming down to the wire

Updated 5:47 p.m. Eastern Time

Tea Party groups - and the lawmakers closely aligned with them - are warning establishment Republicans that the possible passage of a "contingency plan" to raise the debt ceiling could threaten the uneasy alliance between the Republican Party and the Tea Party movement.

In a letter released Monday, a coalition that includes FreedomWorks and the Club for Growth assailed the proposed plan, which, as first laid out by Republican Sen. Mitch McConnell, would shift the responsibility for raising the debt ceiling to the president. Under the initial McConnell plan, the debt limit could potentially be raised without corresponding spending cuts.

The plan "abdicates Congressional responsibility by granting the President the unilateral authority to raise the debt ceiling and undermines out ability to secure real policy changes that will alter our unsustainable fiscal path," said the letter, which was sent to Congressional Republicans. It went on to call on lawmakers not to "sit idly by while [an opportunity to cut spending] is frittered away with a plan to avoid hard policy choices in favor of election-year campaign fodder."

On Tuesday, Freshman Tea Party Republican Rep. Joe Walsh of Illinois circulated a letter to Republicans calling on the House leadership to disavow the McConnell plan and keep it from a vote on the House floor. A Walsh aide told CBS News the letter has more than 60 signatories so far.

"Senator McConnell's plan is business as usual and does not offer any real solution to runaway spending," the letter reads in part.

The decision by many Tea Party-aligned lawmakers to publicly oppose the McConnell plan - which has been cast as a last-ditch option in the event a deal is not reached to raise the debt ceiling by the August 2 deadline - could doom the plan. Senate Majority Leader Harry Reid has been working with McConnell to tweak the initial proposal, potentially adding $1.5 trillion in spending cuts to make it more palatable to fiscal conservatives. But that's not likely to work, a senior GOP aide told CBS News, since (1) skeptics think that's not enough in terms of cuts (2) they view the figure as inflated thanks to accounting tricks and (3) it could include cuts to agriculture spending that many House Republicans oppose.

The aide suggested to CBS News the diminishing prospects for the "McConnell Plus" plan have re-energized efforts to pass a "grand bargain" that includes deficit reductions in the neighborhood of $4 trillion. That could explain the sudden momentum of the so-called "Gang of Six" plan, which President Obama praised Tuesday, which is believed to reduce the deficit by $3.7-$4.7 trillion over a decade (depending on the baseline).

That plan is far from a slam dunk, however. Some Senate Republicans have signed onto the proposal, crafted by a group of senators from both parties, including Sen. Lamar Alexander of Tennessee, who called it a "serious bipartisan effort to stop Washington from spending money it doesn't have" in a statement to CBS News.

But support for the plan in the Senate does not necessarily translate to support in the GOP-led House, where Republicans have repeatedly said they will not back a deal that includes revenue increases. Details are still emerging, but it appears the Gang of Six plan would raise revenues by limiting deductions for "health, charitable giving, homeownership, and retirement" moving to "a competitive territorial tax system" and presumably cutting certain corporate tax loopholes.

"This plan shares many similarities with the framework the Speaker discussed with the president, but also appears to fall short in some important areas," said a spokesman for House Speaker John Boehner. The spokesman pointed as an alternative to the House GOP's "Cut, Cap, & Balance" plan, being voted on late Tuesday, which has virtually no chance of passing the Senate.

House Budget Chairman Paul Ryan, meanwhile, sent CBS News a statement calling the plan "a useful addition to the budget debate." But he added: "Unfortunately, it increases revenues while failing to seriously address exploding federal spending on health care, which is the primary driver of our debt."

Faced with a possible economic catastrophe after August 2, some House Republicans might be willing to back the deal. But even if they do, there might not be a unified Democratic caucus for them to join. The plan would make significant cuts to entitlement programs and other spending cuts that liberal lawmakers are expected to find unacceptable.

Already MoveOn has released a statement saying the plan "appears to ask seniors, the middle class and the poor to bear the burden of deficit reduction, with cuts to Social Security benefits, billions in stealth cuts to be named later, and no real effort to make corporations and millionaires pay their fair share."

So here's the current state of play: The proposed "grand bargain" plan has renewed momentum but uncertain prospects. The prospects for the proposed McConnell back-up plan appear to be diminishing as the Tea Party asserts its authority. And there are just a few days left before the July 22 rough deadlinethat Democrats say the framework for a deal must be in place in order to get it through Congress by August 2.

Meanwhile, Republicans appear to be boxed in by their alliance with the Tea Party and related promise not to agree to a deal that increases revenues even one penny. Unless Democrats agree to a deal in which they essentially make all the concessions - an unlikely prospect - Republicans will need to agree to raise at least some revenues if they want a deal. And that could prompt an angry response from the Tea Partiers who helped them win back the House in 2010.

The Republicans' unwillingness to compromise on revenues in exchange for concessions "that would be normally unheard of from a Democrat" prompted center-right New York Times columnist David Brooks on Tuesday to lament a likely missed opportunity for "a glorious moment in Republican history."

Brooks' harshest criticism in the column was for Grover Norquist of Americans for Tax Reform, the influential beltway player who many observers say has pushed the GOP to the right with his insistence that Republicans never vote for any sort of tax increase. (Brooks writes that Norquist "enforces rigid ultimatums that make governance, or even thinking, impossible.")

Norquist, like with lawmakers who put reelection before governance and talk radio jocks trafficking in apocalyptic rhetoric, does "not believe in seizing opportunities to make steady, messy progress toward conservative goals," Brooks writes. "They believe that politics is a cataclysmic struggle."

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