The RP’s Budget Crisis Update- July 28

After another day of fruitless debt talks, stock markets reacted negatively, with the Dow Jones Industrial Average falling by 1.59 percent, NASDAQ by 2.65 percent, and the S&P 500 by 2.03 percent. [The Daily Beast]

Looking to put the plan up to a vote today, Speaker of the House John Boehner revised his debt-reduction plan following a Congressional Budget Office report that said it would in fact cut less than $1 trillion from the deficit. Under the new plan, cuts total $917 billion, more than the CBO’s original number of $850 billion, coupled with a debt ceiling increase of $900 billion. Additionally, the plan will cut $22 billion in 2012 rather than $1 billion under the first draft. [The Hill]

Following a disappointing scoring by the Congressional Budget Office, Senate Majority Leader Harry Reid has said he will tweak his debt-reduction plan. Though the original plan was supposed to save $2.7 trillion while raising the debt ceiling through the end of 2012, the CBO report said it would only reduce by $2.2. Reid’s stated goal was to bring both the debt ceiling increase and spending decrease to $2.4 trillion. [Roll Call]

In spite of previous reports to the contrary, John Boehner’s speakership is not in trouble, according to Republican Representative Paul Broun of Georgia. Yesterday, various Tea Party groups came out saying that they thought Boehner should (and possibly would) be replaced as Speaker of the House. [The Hill]

The president of credit rating agency Standard & Poor has said that he does not believe the United States will default on its loans while reiterating that the country’s debt problems need to be addressed to assure its fiscal security. This comes in light of recent assertions from both Moody’s Analytics and FitchRatings that a credit rating downgrade would not be catastrophic. [The Hill]

In spite of recent recalculations by groups such as Barclays Capital, the United States Department of the Treasury has said that it will indeed run out of money to pay its obligations on August 2 if the debt ceiling is not increased. Previously, it had been speculated that the Treasury might have enough money to last through August 10. [The Hill]

Debate rages on over the dueling House and Senate budget plans, though there appear to be many similarities between the Boehner and Reid plans. The National Journal lays them out. [National Journal]

Questions have been raised about the legitimacy of President Obama invoking the 14^th Amendment to raise the debt ceiling unilaterally, but that has not stopped some Congressional Democrats. House Assistant Democratic Leader James Clyburn, Representative Jerry Nadler of New York, and other prominent House Democrats have publicly urged the President to raise the debt ceiling himself if Congress does not do so in a timely manner. [Washington Post]

Conservative opinion-maker Grover Norquist has called on House Republicans to support the Boehner debt-reduction plan, saying it is the only plan on the table that meets American for Tax Reform’s criterion of not raising taxes while decreasing spending at a level commensurate with debt ceiling increases. [Politico]

On Wednesday, all 51 Democrats in the Senate, in addition to both independents, signed a letter saying they would not vote for the Boehner plan, taking issue with its two-tiered approach to raising the debt ceiling, which they feel would put the country at risk of defaulting again in about six months. [Roll Call]

With strong opposition to any bill that is not contingent upon a balanced budget amendment, Speaker Boehner has been having difficulty getting the House Republican Caucus in line behind his budget plan. On Wednesday, he is reported to have told his fellow Republicans “get your ass in line” for the vote that is expected on Thursday. This is a change in tone for the Speaker, who has been criticized in the past for not being forceful enough with the Tea Party contingent of his party. [Washington Post 1] [Washington Post 2]