No Deal on Debt Limit/Deficit Reduction Yet

It may not be February 2, but it certainly feels like Groundhog Day on this hot Washington Monday morning.

For those of you following the debt limit/deficit reduction debate, there still is no deal. In fact, the Washington media are making clear that no deal is in sight just one week from the August 2 deadline for when the debt limit must be raised.

On Friday, House Speaker John Boehner walked out of the White House-led talks — though he was back again briefly on Saturday morning — and is now working on his own plan. It was supposed to have been announced yesterday afternoon, but that did not happen. Reports this morning are that he will offer a two-step approach expected to garner no Democratic votes in the House, meaning it would be dead in the Senate. Meanwhile, Senate Majority Leader Harry Reid reportedly is working on a one-step plan that probably will be unpalatable to Republicans. Both call for deep spending cuts, so in terms of NASA, NOAA and DOD space programs, nothing has changed — the future will involve sharp constraints on funding.

The Boehner plan reportedly will propose a $1 trillion raise to the debt ceiling, which will take the nation through to January 2012, in exchange for $1 trillion in spending cuts over 10 years. Between now and January, a congressional commission would come up with deeper spending cuts for that 10-year period, including to entitlements, that would operate the way the Base Realignment and Closure (BRAC) commission did where the House and Senate would have to vote up or down on its recommendations — no amendments could be offered. Then another vote on raising the debt limit would be required.

President Obama has made clear that he does not want to go through this all over again in 2012, an election year for himself, the entire House and one-third of the Senate. The likelihood for bipartisan agreement would be even less likely then. He wants a one-time raise to the debt limiit to take the country through 2013 in exchange for $4 trillion in deficit reduction through spending cuts and tax increases.

Senator Reid reportedly is coming up with such a plan that has deeper spending cuts than the Boehner plan — $2.7 trillion over 10 years — in exchange for raising the debt limit through 2013.

Meanwhile, a Washington Post-ABC News poll shows that 80 percent of Americans are “either dissatisfied or angry about the way the federal government is working.”

Stay tuned. Hopefully a compromise will be reached very soon. If not, the country will learn just exactly what does happen when the government defaults on its debt. Pundits are expecting that the financial markets around the world may make their views known beginning today.