Entries in Federal Debt Limit (12)


Obama 'Will Not Yield' on No Short-Term Debt Extensions

MANDEL NGAN/AFP/Getty Images(WASHINGTON) -- It was, sources from both parties say, the most tense of the deficit reduction meetings yet.

After a period of what was described as constructive discussions, President Obama on Wednesday embraced $1.7 trillion in cuts as a "foundation."

But House Majority Leader Eric Cantor, R-Va., said, "Wherever we are, it’s a long way from the $2.4 trillion needed to meet House GOP goals of dollar for dollar.”  So Cantor suggested a possible short-term extension in order to avoid default, with another vote next year.

The president -- frustrated -- said there would be no short term extensions.  It would be bad for the economy, and resolving the deficit issue certainly won't be easier next year in the throes of the political season, he said.  If we can't do this now, we won't be able to do it next year, Obama reasoned.

“This process is confirming what the American people think is the worst about Washington," the president said.  "Everyone is more interested in posturing, political position and protecting their base than in solving problems.”

Obama said we can get a lot of savings “if the spirit changes from why we can't do things to why we can."

"I have shown enormous willingness to compromise and have taken huge heat for it," Obama said, "but my responsibility is to the American people and there comes a point when I need to say, 'Enough.'"

"It cannot all be on us," the president said, arguing that Republicans need to give on the revenue side of things as Democrats are willing to do so on spending cuts.

If Moody's, the credit rating agency that announced a review of U.S. credit, downgrades the United States, President Obama said, "it will be a tax increase on every American."

There needs to be a long-term debt extension, the president argued.  "This may bring my presidency down, but I will not yield on this,” he said.

"Enough is enough,” the president insisted as he stood up to leave the room.  “We have to be willing to compromise.  It shouldn't be about positioning and politics, and I'll see you all tomorrow."

The group is to recovene Thursday at 4:15 p.m. at the White House and continue debate on cuts in health care spending and revenues that the president still considers necessary if the negotiations are to reach the Republicans’ demand for $2.4 trillion in savings to match the increase in governement borrowing power.

President Obama also told the leaders that by Friday they need to decide where they are heading in the talks -- whether a deal is possible or whether they must turn their attention to avoiding a default.

Copyright 2011 ABC News Radio


Brinkmanship in Debt Ceiling Debate Is Path to Striking Deal

Jupiterimages/Thinkstock(WASHINGTON) -- If you believe all the rhetoric from the past few days, prospects of a deal to stave off U.S. default by the Aug. 2 deadline have dwindled from slim to none.

But leading experts on negotiation tactics say lawmakers’ brinkmanship, while alarming, is actually a healthy characteristic of high-stakes bargaining.

“They are like Asian business brokers,” said Michael Benoliel, director of the D.C.-based Center for Negotiation, likening Congressional leaders to some of his international clients.

“It’s possible they could cut the deal in a week, two weeks, sometimes three weeks before the deadline,” he said.  “But if you’re a negotiator cutting a deal before the deadline, and go to your boss and say, ‘I got a great deal,’ he will say, ‘No, you did not get a good deal because you did not wait until the very last moment.’”

Benoliel, who has advised major multi-national corporations on negotiation strategies, said that in this case the “bosses” are the leaders’ various political constituencies -- and the result of trying to please them too soon is causing temporary gridlock.

“There is a sense that people don’t put everything on the table until late in the game,” he said.

The so-called “deadline effect” will eventually catalyze concession making, says G. Richard Shell,  a professor at the University of Pennsylvania’s Wharton School of Business and author of Bargaining for Advantage: Negotiations Strategies for Reasonable People.

“It’s just like a chemical agent in liquid,” he said of the pressure deadlines put on people to compromise.  “The brinkmanship makes us all hold our breath because there’s always a danger that these negotiations won’t come together in time.  But most of the time it works out.”

President Obama and Republican leaders, House Speaker John Boehner and Senate Minority Leader Mitch McConnell, have agreed they will not allow the U.S. to default on its obligations.  But have also suggested on separate occasions that the U.S. could still be headed towards just that.  

What makes the current debt ceiling debate unique and particularly volatile, experts say, is that for some stakeholders the deadline effect is not in play:  Many Republicans doubt the warnings from administration that Aug. 2 is a hard date for default.  

“If the Aug. 2 deadline is seen as credible by a majority, with a solid reason behind it, then the parties will conclude their negotiations around it,” said Benoliel. “But if the other side believes it’s arbitrary, then not much will happen.”

Copyright 2011 ABC News Radio


Sen. Graham 'Very Worried' on Whether Debt Deal Can Be Reached

ABC News(WASHINGTON) -- As Congress and the president try to strike a deal to cut spending and raise the debt ceiling, one Republican Senator tells ABC News that prospects look bleak.

“Right now I’m very worried,” Sen. Lindsey Graham (R-S.C.) told ABC News.  “If I were a betting man, I’d bet no [deal].”

Sen. Graham said Republicans should be willing to accept a deal that curbs entitlement spending and increases tax revenues by closing loopholes.

“To me, that makes sense,” he said.  “That way you don't raise tax rates, but you do generate new revenue by closing loopholes.  You're giving money away to a few people at the expense of many, and I think it's time to reevaluate that.”

The obvious solution, Graham said, is for Republicans to give some ground on taxes and for Democrats to give some ground on entitlements.  But he doubts negotiators will get there before Aug. 2.

“How to get there from here?” Graham said.  “The president says he’s not going to do a short term extension.  [Republicans] are saying we aren’t going to generate any new revenue.  [Democrats] are saying they aren’t going to do it without revenue.  Well, somebody’s got to blink.”

Graham may be right.  Even as the Congressional leaders met Tuesday at the White House, key players in both parties said the debt ceiling talks had reached an impasse over irreconcilable differences on both taxes and spending.

One top Democratic aide predicted it will take a market crash or near-crash to break the impasse, while a top Republican aide said, “It’s even doomier and gloomier than you think.”

Copyright 2011 ABC News Radio


Boehner on US Debt Default: 'You Could Have a Real Catastrophe'

SAUL LOEB/AFP/Getty Images(WASHINGTON) -- When asked on Tuesday by Brett Baer on Fox News what will happen if Republicans and Democrats don't agree on a deal to raise the debt ceiling, Speaker of the House John Boehner paused rather dramatically and replied, “I don’t know.”

“I don’t think anybody in the world really believes that the United States is going to default on our debt,” Boehner said.  “But given what is going up in Europe, something could spook the market, missing Aug. 2 could spook the market and you could have a real catastrophe.  Nobody wants that to happen.”

Even so, Boehner said, Republicans will continue to push for big spending cuts.

“As dangerous as that may be, I still think that is the time to do this,” Boehner said.  “Making the tough decisions today, not kicking the can down the road is the right thing for this country.”

Boehner placed blame for the impasse on the White House and Congressional Democrats.

“I think the president is trying -- he’s trying to get there," he said.  "But their insistence on us raising taxes is continuing to prevent us from getting this done.”

Asked if he trusts the president, Boehner replied, “I do.”

As for the president’s comments on Social Security checks being in jeopardy beginning on Aug. 3, Boehner said there will still be revenue coming in and “It’s way too early to make veiled threats like that.”

Boehner also spoke positively about Mitch McConnell’s proposal to avoid default as a possible “last-ditch” stop gap measure.

“I think everybody believes there needs to be a backup plan if we are unable to come to an agreement,” Boehner said.  “And frankly I believe Mitch has done good work.”

If we don’t have an agreement as we get closer to Aug. 2, he added, “We may be looking for all kinds of plans to find a way to avoid default."

Copyright 2011 ABC News Radio


Gingrich Condemns McConnell's 'Last Choice' Debt Ceiling Plan

Jessica McGowan/Getty Images(WASHINGTON) -- Former Speaker of the House Newt Gingrich condemned Sen. Mitch McConnell’s “last choice option” plan for the federal deficit, calling it "irresponsible."

“McConnell’s plan is an irresponsible surrender to big government, big deficits and continued overspending.  I oppose it,” Gingrich tweeted Tuesday.

“The answer to Obama’s irresponsibility is a principled ‘no,’ not a blank check,” Gingrich said in a second tweet.

At an event in Pella, Iowa Monday, Gingrich said defaulting would be a “violation of the Constitution.”  Gingrich has argued for no tax increases in the debt negotiations and urged Republicans to hold firm on their requirement of deep spending cuts from Obama.

"Don’t give him a penny more in debt ceiling than he accepts in spending cuts and if he only wants to accept enough spending cuts to get through the next six months that’s fine.  Then six months from now, you’ll have another fight and get another round of spending cuts from it, but insist that we turn the corner and we move on a trajectory that gets us back to a balanced budget and then stay on that balanced budget long enough to pay down the national debt," Gingrich said Monday.

Copyright 2011 ABC News Radio


Deficit Commission Co-Chair Decries Lawmakers' Inability to Make Deal

The White House/Pete Souza(WASHINGTON) -- Former Sen. Alan Simpson, R-Wyo., the GOP co-chair of President Obama's deficit commission, told ABC News that "The American people are disgusted at both parties" for not being able to agree on a measure to reduce the deficit.

"Everybody says, 'What in the hell is going on?'" Simpson said.  "The American people are smarter than their politicians."
He also expressed misgivings about his perception that House Majority Leader Eric Cantor, R-Va., undermined Speaker John Boehner's ability to compromise with Democrats, saying, "The stuff that’s going on in my party, where the -- pettiness overcomes the patriotism -- it’s just disgusting to me."

Simpson criticized anti-tax activist Grover Norquist and the AARP as preventing progress.

"You cant get there with this continual business of don’t touch this and don’t touch that," he said.

He reiterated what the Deficit Commission plan spelled out: that the only way to arrive at a serious attempt at deficit reform is with a combination of cuts to entitlement programs and new taxes.

"Reagan raised taxes," Simpson said.  "We’ve never had less revenue to run this country since the Korean war."

Contrary to some Republicans who've expressed skepticism about the Aug. 2 default date, Simpson said Treasury Secretary "Tim Geithner ain't fooling."

"This is turning into a laugh except there’s nothing funny about it," he said.

Copyright 2011 ABC News Radio


Debt Talks Continue; Consensus Needed on Deficit Reduction

The White House/Pete Souza(WASHINGTON) -- Officials familiar with the negotiations say Monday’s meeting began with President Obama asking House Majority Leader Eric Cantor, R-Va., to lay out what was agreed upon in the deficit reduction talks led by Vice President Biden.

Cantor outlined around $2 trillion in deficit reduction over the next decade: $1-1.1 trillion in discretionary spending; $200 billion in mandatory discretionary spending, such as civilian military retirement and farm subsidies; $200 billion in Medicare and Medicaid; and roughly $200-300 billion in saved interest on the debt.

After Cantor’s presentation, the president said the two sides might be able to reach consensus on roughly $1.7 trillion, though there were still some issues to resolve.

House Speaker John Boehner, R-Ohio, has said the amount they agree to in deficit reduction needs to be equal to -- if not more than -- the amount they agree to raise the debt ceiling.

There seemed to be consensus in the room that the amount by which they need to raise the debt ceiling is $2.4 trillion.  That would get the government to February or March 2013.

Why that date?  No one thinks a lame duck Congress should take this on from November 2012 to January 2013 and that would allow the new Congress and maybe a new president to get his or her sea legs before again addressing the issue.

So Tuesday’s homework assignment, the president said, is for the congressional leaders to figure out how to get from $1.7 trillion to $2.4 trillion.

Republicans are still insisting on no new taxes.  Democrats say they need some revenues -- a “balanced approach” -- to get Democratic votes.

As House Minority Leader Steny Hoyer, D-Maryland, said Monday, “Republicans must be prepared to make concessions of their own and not put the entire burden on seniors, the middle class and the most vulnerable among us."

The president on Monday continued to make the case for a big deal, arguing that if they’re going to draw heat for the deal, they should at least do more than make a down payment on the deficit -- they should get the country on sounder financial footing and begin to seriously bend the deficit cost curve.

The meeting broke after about an hour and a half.

“We’ll meet tomorrow at the White House at 3:45,” the president said.

“A.M. or P.M.?” Senate Majority Leader Harry Reid, D-Nev., joked.

“It may come to that,” the president said.

Copyright 2011 ABC News Radio


White House Debt Talks Make Little Progress, Will Continue Monday

MANDEL NGAN/AFP/Getty Images(WASHINGTON) -- President Obama told congressional leaders Sunday night that he is prepared to make the tough decisions on entitlement spending to reach a deal on raising the debt ceiling and cutting the deficit, a Democrat familiar with the negotiating process told ABC News.

But if Republicans are not willing to do the same regarding taxes, the president asked them during a meeting at the White House, what is their alternative?

After meeting for 75 minutes, congressional leaders will be back at the White House Monday afternoon to continue negotiations.

On Monday morning, the president will hold a news conference on the matter, making his case to the American people about why tax rates for wealthier Americans and corporations need to be raised as part of a deficit reduction package of at least $4 trillion over the next decade.

Republicans say House Speaker John Boehner, R-Ohio, sought a similarly sized package that would reduce and reform entitlement spending and cut and cap discretionary spending.  The bill -- which would also raise the debt ceiling through November 2012 -- would contain language committing to principles of tax reform, which key House and Senate committee chairmen would then turn into actual numbers.

Talks broke down, Republicans said, when the president would not commit to the principle that everyone's tax rates would come down.

Also in Sunday night's meeting, Obama again took the idea of a short-term debt ceiling fix off the table.  Whatever Congress passes in terms of deficit reduction, the debt ceiling needs to be raised until after November 2012, a Democratic briefing on the discussions told ABC News.

The president also told congressional leaders to come back Monday with a view on what could pass both the House and the Senate.

A Democratic aide familiar with the process said that Boehner "put on the table letting the Bush tax cuts for the wealthy expire and banking the revenue and then he bailed.  The speaker couldn't take the heat from the Republican caucus."

Although Boehner warned Saturday evening that the two sides should "focus on producing a smaller measure, based on the cuts identified in the [Vice President Joe] Biden-led negotiations," Democrats involved in the negotiations say they still prefer to go for the "grand bargain" that would cut closer to $4 trillion over 10 years.

"We came into this weekend with the prospect that we could achieve a grand bargain," House Minority Leader Nancy Pelosi said in a statement following the meeting.  "We are still hopeful for a large bipartisan agreement, which means more stability for our economy, more growth and jobs, and more deficit reduction over a longer period of time."

"This package must do no harm to the middle class or to economic growth," the California Democrat said.  "It must also protect Medicare and Social Security beneficiaries, and we continue to have serious concerns about shifting billions in Medicaid costs to the states."

A senior aide to the speaker said Boehner told the leaders that he still "believes a package based on the work of the Biden group is the most viable option at this time for moving forward."

Copyright 2011 ABC News Radio


Debt Talks Continue Between Obama, Lawmakers at White House

Comstock/Thinkstock(WASHINGTON) -- Just one day after President Obama warned Congress against "toying" with the debt ceiling, the deficit talks will continue on Thursday, when Congressional leaders meet with the president and vice president at the White House.

House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Minority Leader Nancy Pelosi, House Majority Leader Eric Cantor, Senate Majority Whip Dick Durbin, Senate Minority Whip Jon Kyl and House Minority Whip Steny Hoyer are all expected to attend Thursday morning's meeting.

With just weeks to go until the Aug. 2 deadline to raise the country’s $14.3 trillion debt limit, Obama is expected to push congressional leaders to think big and embrace spending cuts as well as new taxes and sources of revenue that exceed the $2 trillion in deficit reduction over the next 10 years that both sides have been negotiating.

The White House has made clear that it’s not willing to “kick the can down the road” when it comes to solving the nation’s deficit, and Obama will likely press the leaders to put together a larger package addressing new taxes, entitlement spending, defense spending, and discretionary spending.

On Wednesday, the president issued a stern warning that the debt ceiling should not be “used as a gun against the heads of the American people to extract tax breaks” for the wealthy and said that any agreement should include "what works," which he believes is a modest tax increase on the wealthy.

“You're entitled to your own opinions, but not your own facts.  And the facts are that a modest increase for wealthy individuals is not shown to have an adverse impact on job growth,” Obama said at the White House Twitter town hall. Others argue since "wealthy individuals" can include employers -- and that small businesses often get snagged in tax hikes -- Obama's "modest increase" would devastate an already-anemic employment picture.

The president said this week that in order to make a deal both sides are going to have to abandon their "sacred cows" and give a little.  As Obama explained, “everybody's going to leave their ultimatums at the door” and do what’s best for the country.

Copyright 2011 ABC News Radio


Conflicting Schedules in Congress Hampering Debt Talks?

Jupiterimages/Thinkstock(WASHINGTON) -- There are 25 workdays remaining between Tuesday and what some are calling a potential financial apocalypse -- when the U.S. government exhausts emergency borrowing authority and the nation's debt ceiling must be raised.

But between now and the Aug. 2 deadline, are only 12 days when both chambers of Congress will be in session.

The Republican-controlled House and the Democrat-controlled Senate have proven to be miles apart ideologically when it comes to their goals on debt reduction, but the two chambers have also been furlongs away physically for much of this year's legislative session.

In the nearly six months that Congress has been in session, there have been only 59 days when both chambers met for legislative business at the same time, an unusually low number according to some congressional scholars. That means so far this year the flags flew simultaneously over both chambers about 65 percent of the time.

Normally, the House and Senate take joint breaks around holidays such as the Fourth of July, Memorial Day, and Veterans' Day.  But not this year.  The House is out this week for a break leading up to Independence Day while the Senate takes its holiday break next week.

It will be the same story in November when the House takes its Veterans' Day leave the week of the holiday and the Senate takes its the week after.

"It's very unusual," said Norm Ornstein, a political analyst at the American Enterprise Institute.  "You have a Congress where the House and Senate are completely out of sync.  Usually there is a very substantial amount of overlap."

But this year, new House Majority Leader Rep. Eric Cantor, whose office sets the House schedule, said in a Dec. 8, 2010 letter to his fellow representatives that his intent was to create certainty by publishing the full calendar before the start of the session, increase efficiency and productivity by grouping working days together, and guaranteeing at least one five-day constituent work week every month.

There was no mention of taking the Senate's schedule into consideration.  The Senate did not make any amendments to its calendar following Cantor's announcement of the House's schedule.

The houses are not meant to work in tandem, but the scheduling has created some difficulty for debt talks, which stalled late last week.

"The image of Wall Street people pulling their hair out and members kind of back in their districts talking about agriculture subsidies strikes you as pretty strange," said Sean Theriault, a congressional scholar at the University of Texas.

It will take until the last possible moment "before the world collapses" for lawmakers to strike a deal on the debt ceiling, Thierault said.

Copyright 2011 ABC News Radio

ABC News Radio