Senate Majority Leader Harry Reid (D-Nev.) will postpone plans to move on a fallback option to raise the debt limit to give the House a chance to move first.
The delay on a fallback plan significantly increases the pressure on President Obama and House Speaker John Boehner (R-Ohio) to reach a deal by themselves to avoid a national default. [...] Reid said “circumstances have changed” in the wake of media reports that Obama and Boehner are closing in on a $3 trillion deficit-reduction deal that would raise the debt limit and establish a promise to reform the tax code at a later date. [...] “The path to avert default now runs through the House of Representatives,” he said. “We in the Senate must wait for them.”
House Minority Leader Nancy Pelosi acknowledged Friday that Democrats may reluctantly accept a last-minute compromise to raise the debt limit that involves up to $2.5 trillion in spending cuts, without any agreed-upon plan for new tax revenues.
The plan would place a firewall between entitlement spending and the threat of default, upsetting GOP plans to force deep cuts to those programs. And if, as a result, the GOP declined the offer, Democrats would agree to punt the questions of entitlement spending and tax cuts to a future, streamlined legislative process.
So the McConnell-Reid fallback option is apparently out and House Democrats are prepared to accept a revenue-free debt deal as long as it doesn't cut entitlements.
Both moves clear the way for President Obama and John Boehner to strike a deal in which Republicans get pretty much everything that they've been asking for and Democrats get just about nothing.
But Obama and Boehner both say that there is no deal, and that they aren't close to one. Either they're both lying, or we're ten days away from running smack into the debt ceiling.
12:28 PM PT: Pelosi gets to $2.5 trillion by starting with $1 trillion in cuts, $500 billion interest savings, and then adding the following:
We could go even further with non-health mandatories, could take us almost to two trillion. We could use the offshore -- the Overseas Contingency [the wars in Iraq and Afghanistan] -- could take us to two-and-a-half trillion dollars. Which is the dollar-for-dollar for the lifting the debt ceiling. I don't think we have to have dollar-for-dollar, but for those who think they do, there's a path to get there.