'Clever' McConnell Plan Could Break Debt Impasse: Altman

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Senate Minority Leader Mitch McConnell (R-KY)

Sen. Mitch McConnell's "clever" proposal to give President Barack Obama sole authority to raise the debt ceiling could break the impasse in Congress, Evercore Partners Chairman Roger Altman said Thursday.

The Senate Minority Leader on Tuesday proposed a complicated legislative maneuver whose ultimate effect would allow the president to bypass a deeply divided Congress and raise the debt ceiling.

"Sen. McConnell, among other things, is a very skilled politician and legislator, and this proposal illustrates that," Altman said of the Kentucky Republican. "If there is no other alternative, it might be acceptable" to President Obama, who can act unilaterally, and to Republicans, who won't have to vote on anything raising the deficit.

Altman, a former assistant Treasury secretary in the Clinton administration, told CNBC a separate vote on the debt limit "is stupid, because the debt limit is just a product of the budget decisions made earlier."

"Most countries don't vote separately on the budget on one hand and on their amount of allowable debt on the other," he added. "They just have one vote. Of course, we should do that, too."

On Thursday Moody's reiterated its warning it would downgrade the credit rating of the U.S. if lawmakers fail to increase the debt ceiling. Moody's cited the increasing possibility Congress will fail to act before Aug. 2, the point at which the U.S. will not be able to pay its bills.

"I don't think we're going to default," Altman said. "I think as we get close to the deadline various parties will have to make some concessions. If it's absolutely necessary that the package go forward on a spending-only basis, then I think it will."

Democrats have been stymied on their plan to increase revenue through tax increases to counter Republican proposals for $1.2 trillion in cuts.

Altman said one way Democrats could get those tax increases would be to wait until 2012 when the Bush-era tax cuts on high-income earners come up for another vote in Congress. The cuts were extended in December for two years.

The president "could get a second bite at the apple of putting revenue in the package at that time," Altman pointed out.

"This isn't going to be all done now," he said of the current debt battle. "This isn't the only opportunity to have a balanced package which includes revenue."