McConnell: Don’t help re-elect Obama

Associated Press

WASHINGTON

Failure to raise the U.S. debt limit would probably ensure President Barack Obama’s re-election in 2012, Senate Republican leader Mitch McConnell warned fellow conservatives on Wednesday, fresh evidence of deep GOP political divisions on an issue of paramount importance to the nation and its economy.

McConnell spoke before Obama and congressional leaders met privately at the White House for a fourth straight day — they broke up just after two hours — struggling to avert an unprecedented government default threatened for Aug. 2.

At the same time, Moody’s Investors Service announced it was reviewing the U.S. bond rating for a possible downgrade, a change that could lead to higher interest rates for many Americans. Moody’s cited a “rising possibility that the statutory debt limit will not be raised on a timely basis.”

At the Capitol, rank-and-file lawmakers advanced their own fallback measures in case the bipartisan compromise talks fail.

One version, authored by Sen. Bill Nelson, D-Fla., was designed to make sure Social Security benefits are paid on time. Another, unveiled by a trio of House conservatives, would give priority to paychecks for members of the armed forces.

“Currently, there is not a single debt limit proposal that can pass the House of Representatives,” House Majority Leader Eric Cantor, R-Va., said in a written statement. He said efforts should focus on “what we can agree upon” rather than Democratic demands for raising taxes or GOP calls to repeal the health-care bill.

Without an increase in government borrowing authority by Aug. 2, Treasury Secretary Tim Geithner has warned, there could be a default posing a catastrophic risk to the economy, still recovering from the worst recession in decades.