Home
June 15, 2011
Debt talks set July 1 deadline for deal
Washington, A group of top lawmakers on Wednesday set an ambitious July 1 goal to reach a broad debt-reduction deal, even though Republicans and the White House are still far apart on taxes and healthcare.
Vice President Joe Biden sat down in the Capitol with six lawmakers trying to agree on how to narrow huge budget deficits and raise the $14.3 trillion debt limit so the United States can avoid defaulting on its financial obligations and keep borrowing money to pay its bills.
The group, which is hoping to break through the growing political partisanship in the run-up to November 2012 elections, talked about proposals that would trigger automatic spending cuts and possibly tax hikes if Congress cannot narrow trillion-dollar budget deficits in the coming years.
"There was broad support for the idea that we put in place a mechanism that ensures deficit reduction," Democratic Representative Chris Van Hollen told reporters after the second straight day of talks. But he said Republicans and Democrats were still at odds over how to implement the mechanism.
Negotiators, who will return on Thursday to review their progress to date, are under increased pressure for a deal.
President Barack Obama and Federal Reserve Chairman Ben Bernanke warned this week of the potentially devastating economic consequences if the debt limit was not raised by an August 2 deadline, when the Treasury has warned it will run out of money.
Republicans have said any increase in the debt limit must include spending cuts equal in size. That would mean cuts of at least $2 trillion to ensure Congress does not have to revisit the politically toxic issue before 2012 elections.
The Biden talks, which began in early May, have been slow-moving as the two sides stand firm on their positions on taxes and healthcare. The White House and Republicans have tentatively agreed to save at least $150 billion over the next 10 years by trimming areas such as farm subsidies.
Participants said there were still hurdles but they hoped for a deal by July 1.
"There's a path forward but there's still a long way to go. There are a lot of impediments to reaching a final deal but we are making progress there," Van Hollen said.
Assistant Senate Republican leader Jon Kyl said July 1 was the goal for a deal, but he was unsure if it could be met.
Obama and House of Representatives Speaker John Boehner, the top Republican in Congress, want the group to complete its work by July 4, well before the Treasury's August 2 deadline, to avoid spooking financial markets.
A majority of 70 economists surveyed in a Reuters poll said it was "highly unlikely" that the United States would go into a technical default, when the government would be unable to meet some financial obligations.
The stubborn divide over whether to raise taxes -- which Republican oppose and Democrats favor -- resurfaced as the lawmakers discussed how to implement caps.
The White House and Republicans disagree on the actual mechanisms of the triggers that would go into effect if Congress does not get budget deficits under control.
Republicans want to lower spending from the current level of 25 percent of gross domestic product to below 20 percent. They say automatic spending cuts should be triggered if this level was breached.
Democrats say that would tie the government's hands and would make it unable to respond to emergencies. They say it is better to set overall deficit or debt targets in coming years, and allow for either tax increases or spending cuts to close the gap if these targets aren't reached.
Van Hollen said Democrats wanted to close special interest tax loopholes, get rid of oil subsidies and special tax breaks for things like corporate jets.
Republican leaders have said closing tax loopholes should be done in the context of broad tax reform that would lower rates, a task that is beyond the scope of the Biden group.
The White House wants to see a payroll tax cut for businesses and the issue was discussed in Tuesday's talks. Some leading Republicans have said they would prefer comprehensive tax reform instead of a payroll tax cut now.
A payroll tax cut would cost roughly $200 billion over 10 years, according to former White House economic adviser Larry Summers. That would complicate the Biden group's task of finding more than a trillion dollars in deficit savings.
[You must be registered and logged in to see this link.]
Debt talks set July 1 deadline for deal
Washington, A group of top lawmakers on Wednesday set an ambitious July 1 goal to reach a broad debt-reduction deal, even though Republicans and the White House are still far apart on taxes and healthcare.
Vice President Joe Biden sat down in the Capitol with six lawmakers trying to agree on how to narrow huge budget deficits and raise the $14.3 trillion debt limit so the United States can avoid defaulting on its financial obligations and keep borrowing money to pay its bills.
The group, which is hoping to break through the growing political partisanship in the run-up to November 2012 elections, talked about proposals that would trigger automatic spending cuts and possibly tax hikes if Congress cannot narrow trillion-dollar budget deficits in the coming years.
"There was broad support for the idea that we put in place a mechanism that ensures deficit reduction," Democratic Representative Chris Van Hollen told reporters after the second straight day of talks. But he said Republicans and Democrats were still at odds over how to implement the mechanism.
Negotiators, who will return on Thursday to review their progress to date, are under increased pressure for a deal.
President Barack Obama and Federal Reserve Chairman Ben Bernanke warned this week of the potentially devastating economic consequences if the debt limit was not raised by an August 2 deadline, when the Treasury has warned it will run out of money.
Republicans have said any increase in the debt limit must include spending cuts equal in size. That would mean cuts of at least $2 trillion to ensure Congress does not have to revisit the politically toxic issue before 2012 elections.
The Biden talks, which began in early May, have been slow-moving as the two sides stand firm on their positions on taxes and healthcare. The White House and Republicans have tentatively agreed to save at least $150 billion over the next 10 years by trimming areas such as farm subsidies.
Participants said there were still hurdles but they hoped for a deal by July 1.
"There's a path forward but there's still a long way to go. There are a lot of impediments to reaching a final deal but we are making progress there," Van Hollen said.
Assistant Senate Republican leader Jon Kyl said July 1 was the goal for a deal, but he was unsure if it could be met.
Obama and House of Representatives Speaker John Boehner, the top Republican in Congress, want the group to complete its work by July 4, well before the Treasury's August 2 deadline, to avoid spooking financial markets.
A majority of 70 economists surveyed in a Reuters poll said it was "highly unlikely" that the United States would go into a technical default, when the government would be unable to meet some financial obligations.
The stubborn divide over whether to raise taxes -- which Republican oppose and Democrats favor -- resurfaced as the lawmakers discussed how to implement caps.
The White House and Republicans disagree on the actual mechanisms of the triggers that would go into effect if Congress does not get budget deficits under control.
Republicans want to lower spending from the current level of 25 percent of gross domestic product to below 20 percent. They say automatic spending cuts should be triggered if this level was breached.
Democrats say that would tie the government's hands and would make it unable to respond to emergencies. They say it is better to set overall deficit or debt targets in coming years, and allow for either tax increases or spending cuts to close the gap if these targets aren't reached.
Van Hollen said Democrats wanted to close special interest tax loopholes, get rid of oil subsidies and special tax breaks for things like corporate jets.
Republican leaders have said closing tax loopholes should be done in the context of broad tax reform that would lower rates, a task that is beyond the scope of the Biden group.
The White House wants to see a payroll tax cut for businesses and the issue was discussed in Tuesday's talks. Some leading Republicans have said they would prefer comprehensive tax reform instead of a payroll tax cut now.
A payroll tax cut would cost roughly $200 billion over 10 years, according to former White House economic adviser Larry Summers. That would complicate the Biden group's task of finding more than a trillion dollars in deficit savings.
[You must be registered and logged in to see this link.]
