White House makes debt ceiling push
As the deadline for reaching a deal on the debt ceiling nears, discussions about what to pair an increase in the limit with are intensifying. Today, the President and Vice President sit down with Congressional leaders to continue working toward an agreement. In anticipation for the meeting, the Administration has ratcheted up its expectations for the deal. Rather than matching a $2.4 trillion increase in the limit, the White House has called for $4 trillion in deficit reduction over 10 years.
Vice President Joseph Biden, in talks with Congress, has already done significant spadework but a $4 trillion target increases the likelihood of some commitment to tax reform in hopes of luring Republicans on board and lifting the economy to generate revenues for the future.
Potential savings already identified by the Biden group include about $1.1 trillion in savings from future defense and domestic appropriations, and upwards of $600 billion from various government benefits and subsidies. Within these totals about $350 billion to $400 billion is now attributed to Medicare and Medicaid savings, and one wildcard still is a proposed change in how the inflation adjustments are made each year for benefits as well as tax brackets and personal exemptions.
In one indication of how badly the White House wants to reach an agreement in a timely manner, the White House has put cuts to Social Security on the table. This is a significant concession that will surely displease some Congressional Democrats who have so far been unwilling to consider cuts to the program.
The Washington Post explains:
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.
“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”
As many have noted, the near-term and long-term health of our economy hinge on these high-level negotiations. And this morning, Politico reveals that there is no back-up plan should the talks fall through. While some reports indicate the Treasury Department is working on plans to avoid a default, this morning’s news underscores just how important it is for lawmakers to stop playing partisan politics and come to an agreement that addresses our spending problem. Both parties have contributed to the problem; both need to part a solution.