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Archive for Saturday, July 30, 2011

President, congressional leaders take late shot at debt-limit deal to avert U.S. default

July 30, 2011, 10:35 p.m. Updated July 31, 2011, 12:27 a.m.

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In a last-minute stab at compromise, Republican congressional leaders and the White House made significant progress Saturday night toward a deal to avert a government default threatened for early next week, according to officials familiar with the talks.

Under the plan, the nation’s debt limit would rise in two steps by a total of about $2.4 trillion and spending would be cut by a slightly larger amount, these officials said. The first stage — about $1 trillion — would take place immediately and the second later in the year.

Congress would be required to vote on a balanced budget amendment to the Constitution, but none of the debt limit increase would be contingent on its approval.

One Republican official said the two sides had settled on general concepts, but added there were numerous details to be worked out, and no assurance of a final agreement. A Democratic official said the two sides were “not really” close to a deal, but added that one could come together quickly. They spoke only on condition of anonymity about the private negotiations.

Word of significant progress after weeks of stalemate offered the strongest indication yet that an economy-crippling default might be averted.

Without legislation in place by next Tuesday, administration officials say the Treasury will run out of funds to pay all the nation’s bills. They say a subsequent default could prove catastrophic for the U.S. economy and send shockwaves around the world.

President Barack Obama is seeking legislation to raise the government’s $14.3 trillion debt limit by about $2.4 trillion, enough to tide the Treasury over until after the 2012 elections. Over many weeks, he has agreed to Republican demands that deficits be cut — without a requirement for tax increases — in exchange for additional U.S. borrowing authority.

But President Barack Obama has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect, saying that would invite a recurrence of the current crisis in the heat of next year’s election campaigns.

First word of an effort to reach a compromise came at mid-afternoon from Senate Republican Leader Mitch McConnell and House Speaker John Boehner — Obama’s principal Republican antagonist in a contentious new era of divided government. Both GOP leaders said they were in touch with the White House and hopeful of a deal.

Senate Majority Leader Harry Reid heatedly denied their claims of progress on the Senate floor a short while later, but several hours later said events had changed.

“There are many elements to be finalized...there is still a distance to go,” he said in dramatic late-night remarks. “I’m glad to see this move toward cooperation and compromise,” he added.

He said he was optimistic any agreement would not include a short-term extension of the nation’s debt limit — a point on which Obama has insisted.

Officials familiar with the discussions said that while the first-step increase in borrowing authority and cuts in spending would happen at once, the next step would be somewhat more complicated.

The additional increase in borrowing authority, about $1.4 trillion, would be linked to creation of a special committee of lawmakers charged with recommending deficit cuts of a slightly larger size. If the panel failed to act, or its proposals were rejected in Congress, automatic spending cuts would take effect to slice spending by slightly more than $1.4 trillion, possibly affecting Medicare and the Pentagon.

The terms under discussion appeared to satisfy key demands made by both sides.

Obama would prevail on insisting that after the legislation is passed, Congress would not be required to vote for debt limit increases to take place. Republicans would win spending cuts slightly larger than any debt limit increase and avoid any higher taxes.

Reid said that at the request of White House officials, he was postponing a test vote set for shortly after midnight on his own legislation to raise the debt limit while cutting spending.

Republicans opposed his bill, and said in advance they had the votes to block its advance.

Halfway around the world, on a visit to Camp Leatherneck in Afghanistan, the nation’s top military officer fielded questions from troops asking if they would be paid in the event of a default.

“I actually don’t know the answer to that question,” said Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, although he told them they would continue to go to work each day.

Obama, in his weekly radio and Internet address, said there were several ways out of the gridlock that has prevented action by Congress, then added, “There is very little time.”

But to get to the endgame, Republicans and Democrats had to go through the formality of killing each other’s bills — scoring their own political points — before they could turn to meaningful negotiations.

And a few hours after the president spoke, House Republican leaders engineered a vote to defeat the Reid-drafted proposal to raise the debt limit on a near-party line vote at mid-afternoon.

That was payback of sorts — Reid had arranged the rejection of a House-passed bill on Friday within minutes after it reached the Senate.

Individual lawmakers expressed anxiety about the prospect that faced the country if it were to default for the first time in history.

“I’m worried about Congress defaulting on our country,” said Sen. Johnny Isakson, R-Ga., urging lawmakers to find common ground. He suggested that spending cuts take place automatically if necessary to ensure the debt limit does not expire before 2013.

With financial markets closed for the weekend, lawmakers had a little breathing room, but not much. Asian markets begin opening for the new work week when it is late Sunday afternoon in the capital.

In his remarks at a news conference, McConnell said Obama “needs to indicate what he will sign, and we are in those discussions.”

He said later he had spoken several times during the day with Vice President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default.

Boehner said that despite the partisanship of recent weeks, “I think we’re dealing with reasonable, responsible people who want this crisis to end as quickly as possible and I’m confident it will.”

The talk of compromise contrasted sharply with the day’s earlier developments as both the House and Senate convened for unusual Saturday sessions.

The House voted down legislation drafted by Democrat Reid to raise the government’s debt limit by $2.4 trillion and cut spending by the same amount.

The vote was 246-173, mostly along party lines and after debate filled with harsh, partisan remarks.

Republicans said the Reid spending-cuts plan was filled with gimmicks and would make unacceptable reductions in Pentagon accounts. “It offers no real solutions to the out-of-control spending problems,” said Rep. Alan Nunnelee of Mississippi, part of a group of 87 first-term Republicans who have led the push for deeper spending cuts.

Not even Democrats seemed to like the legislation very much, although many emerged from a closed-door meeting of the rank and file saying they would vote for it.

Rep. Lloyd Doggett, D-Texas, called it “the least worst alternative to avoid default.”

Yet with their votes, many Democrats signaled their readiness for compromise by voting to cut spending without raising taxes. Many Republicans insist taxes must not be raised to cut into federal deficits, even for the wealthiest Americans and for big oil companies.

House Democratic leader Nancy Pelosi said Boehner “chose to go to the dark side” when he changed his own legislation to satisfy tea party lawmakers and other critics.

There were catcalls from the Republican side of the aisle at that, and Pelosi responded by repeating that the speaker “chose to go to the dark side.”

The House-passed bill provides for a $900 billion debt limit increase, coupled with $917 billion in federal spending cuts.

The last-minute change requires both houses of Congress to approve a Constitutional balanced budget amendment as a precondition for additional borrowing authority to take effect.

Republicans ridiculed Reid’s legislation.

“Not only does it fail to address our spending and debt problem, it won’t even prevent a downgrade of our credit rating,” said Rep. Scott Garrett, R-N.J. “We need actual cuts to government spending to address our long-term debt crisis, not phantom cuts and accounting gimmicks.”

Comments

uncleandyt 3 years, 5 months ago

Sounds to me like the flip-floppin' can-kickers are pouring over every jot and tittle to preserve liberty for those who deserve the free-est of freedoms.

Cait McKnelly 3 years, 5 months ago

Dunno but it points up a real problem of angst among the GOP; they have no problem cutting Social Security and medicare and calling them "entitlements" but touching the military budget is obviously off limits.

love2fish_ks 3 years, 5 months ago

I am so tired of all the drama.

It almost seems like the President is trying to force an impass. Strange. All the talk to scare Seniors and the military are very non-Presidential. I remmber the total gov't shutdown in the 90's. Medicare, SS, Prisons, FBI, CIA, Military, and bond holders were paid. Almost every other Govt office was closed. The shutdown lasted for 3 weeks, the stock market actually went up, and eventually an agreement was reached.

This is not what we voted for with the President. Enough with the drama.

Don Whiteley 3 years, 5 months ago

Democrats refuse to allow limits on how deep they can throw America into debt and Republicans refuse to allow any taxation of their corporate and executive sponsors. Both sides represent the extreme positions their parties have now adopted. Never has America been so badly in need of a third or even a fourth major political party. Regardless how this turns out, in 2012 we all need to remember: "Throw the bums out!"

just_another_bozo_on_this_bus 3 years, 5 months ago

Republicans are just as responsible for the amount of debt as Democrats are.

conservative 3 years, 5 months ago

Yes Republicans have been bad financial stewards over the last 2 decades, however Democrats have them horribly overmatched when it comes to spending money we don't have. You always like to throw out the cost of the "Bush Wars" as why we're in such bad shape. Total cost of both Iraq and Afghanistan over 10 years was 1.2 Trillion. Obama has increased debt by 4.5 Trillion in 30 months. The Republicans are the ones standing up and saying we cannot continue to just spend, spend, spend. If it wasn't for the Republicans the Democrats would just raise the debt limit without a single cut in spending.

just_another_bozo_on_this_bus 3 years, 5 months ago

First, the expense you list for the wars is extremely low-ball. It doesn't include any of the baseline defense spending that makes such wars possible, and certainly doesn't include any of the outlying expenses for veterans benefits, etc. The true, eventual cost of these wars is easily ten times what you want to claim.

You neglect to mention the cost of the Bush tax cuts, which by themselves are nearly equivalent to the debt you want to attribute to Obama.

And nearly all of the debt you attribute to Obama is a direct result of the budgets created under Bush and/or the collapse of the economy that came under his watch.

You're very naive if you think Republicans have any real intentions of eliminating either the debt or deficit spending. Republicans merely believe that these debts should only serve to subsidize millionaires and billionaires and the corporations they own. Democrats want to subsidize these folks, too, but at least some of them also happen to think that the other 99.9% of the American people deserve a little from the government, as well.

just_another_bozo_on_this_bus 3 years, 5 months ago

"Republicans said the Reid spending-cuts plan was filled with gimmicks and would make unacceptable reductions in Pentagon accounts."

Translation-- Republicans insist that all debt reduction happen on the backs of the poor, the elderly, kids and the disabled.

just_another_bozo_on_this_bus 3 years, 5 months ago

I'm sure there are savings that can be found in all of them. Some of them may very well need major restructuring. But all exist for good reasons, so eliminating them, or just blindly slashing funding, is idiotic and even cruel.

As you noted-- I'm for balanced government. And there is absolutely nothing balanced about the amount of funding that goes to the military relative to the list you supplied above.

Not that someone like you, who believes that all government is always evil, would understand that.

jafs 3 years, 5 months ago

Why do you focus on those programs?

Liberals like the idea of a government that helps people, so of course he'll like those programs, which exist in order to do just that.

There are plenty of other programs that he'd cut, including the military, which makes up about 1/2 of our federal spending.

just_another_bozo_on_this_bus 3 years, 5 months ago

Yes, I do want balance. But we currently have a massive imbalance in how we spend money, and that imbalance is not tilted in favor of the social-safety-net programs you listed. Therefore, cutting their funding will do nothing to correct the imbalance. To the contrary, it would exacerbate it.

conservative 3 years, 5 months ago

Hey Bozo do you actually pay attention to what is going on or do you just kneejerk type? A large portion of the "cuts" over the next decade that Reid put forth was to stop funding the war in Afghanistan. We are already scheduled to pull out so those aren't actually cuts. It's like saying you are saving money by not buying a porche every month, it was never in the budget to begin with so it's not a savings.

just_another_bozo_on_this_bus 3 years, 5 months ago

If you want to know what I think of Reid, read this Krugman article, which I've linked elsewhere-- http://krugman.blogs.nytimes.com/2011/07/26/the-cult-that-is-destroying-america/

I hope you're right that we're getting out of Afghanistan soon. But I have serious doubts about that. Regardless, I don't see how any cuts in spending in Afghanistan are "less real" than any proposed Republican cuts. A reduction is spending is a reduction in spending.

With one caveat-- money spent on the social safety has a positive ripple effect in the domestic economy. Money spent on the military has a considerably smaller ripple effect. In other words, money down the toilet.

Richard Heckler 3 years, 5 months ago

The Repub party aka neocon Tea Party is afraid of:

  • A dramatically improved quality of life for all americans

  • Jobs Jobs Jobs for americans

  • New USA industry thus new wealth for america

  • New cleaner energy sources because it would create so many new jobs

  • Improved Medicare Insurance for All = huge tax dollar savings to government

  • Green Collar Industries which produce jobs that cannot be outsourced

  • Repubs fear educated Americans because WE ask questions

  • Losing of tax incentives/tax breaks for the wealthy that actually create tax increases for entire spectrum of the middleclass

  • Repubs should want a dramatically improved quality of life for all Americans but they keep saying NO

  • Repubs should want Clean air, clean water, clean energy and healthy green space scattered throughout America however they always vote NO

  • Face it dramatically improved quality of life for all WOULD keep them out of control for decades.

BRING ON EMPLOYMENT = THE GREATEST REPUBLICAN FEAR ON EARTH!!!

Richard Heckler 3 years, 5 months ago

The Obstacles

Pres Obama,

The largest obstacles are fear of losing special interest campaign money, guts to terminate Bush tax cuts and backbone to cut off pork barrel corporate subsidies.

If all sides of the aisle were interested in a budget of substance that accomplishes all that matters there is only one budget on the table.

People's Budget = $4 trillion reduction

This is the only budget that does everything this country needs:

* Creates good-paying jobs
* Fully maintains our social safety net
* Invests in education
* Ends our costly wars
* Closes the tax loopholes that have made offshoring jobs profitable
* Ends oil and gas subsidies that pollute our country at taxpayer expense
* Creates a national infrastructure investment bank to help us make intelligent investments for the future

What the Peoples Budget does very specifically:

http://cpc.grijalva.house.gov/index.cfm?sectionid=70&sectiontree=5,70

http://www.npr.org/2011/04/15/135435883/the-nation-obama-should-fight-for-peoples-budget

http://www.democracynow.org/2011/4/14/while_obama_touts_compromise_with_gop

http://www.thenation.com/blog/159939/fighting-peoples-budget

Flap Doodle 3 years, 5 months ago

Forget the people's budget! Read the people's cube! The people's cube = waaaay more amusing. http://thepeoplescube.com/peoples-blog/there-is-no-hope-rejoice-t7556.html

Richard Heckler 3 years, 5 months ago

The repub party aka The RINO neocon Tea Party for the past 31 years have represented dumb economics which has resulted in wreckanomics. Damn this must be supply side economics that does nothing but borrows borrows spends spends spends then increases taxes and puts millions upon millions upon millions put of work.

Then Koch and Wal-Mart family money come along to support all sorts of campaigns that call for reducing wages for hard working americans. It seems to me without hard working americans foolish enough to spend their money with these billionaire families these families would not be billionaires.

I swear there is something wrong with this picture.

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