With four weeks left, a debt ceiling deal?

July 5, 2011

Congressional and Administration negotiators have four weeks to come to an agreement on how to increase the nation’s statutory debt limit. Thanks to decades of overspending, the federal government has found itself in an extremely difficult position. After officially hitting the current $14.3 trillion debt ceiling, the Treasury Department enacted what it referred to as “extraordinary measures” to allow Congress until August 2nd to come to an agreement on how best to address the issue. Discussions have continued in earnest since then, but major sticking points call into question Congress’ ability to meet the deadline.

Two reports this morning offer contrasting views on the likelihood of a deal by in time to avoid a potential default.

ABC news is not optimistic:

The canceled congressional recess gives the two sides in deficit negotiations more time to talk it out.

But a lack of talk hasn’t been the problem. Democrats and Republicans are talking past each other, or, at least, aren’t listening to the other side in high-stakes negotiations that might make the unthinkable come to pass when it comes to the nation’s debts.

The impasse has leading officials in both parties conceding privately that a default on the nation’s death is a possible, though not yet likely, outcome. Realistically, a deal has to be reached about 10 days earlier than that to ensure that it becomes law in time.

In that context, there’s little to no chance of a major breakthrough that would extend the debt limit by $2 trillion, enough to get the nation through 2012, with a corresponding amount of deficit reduction.

Conversely, Reuters offers a markedly more hopeful report:

You would never know it from all the hot air rising out of Washington, but President Barack Obama and congressional Republicans could easily reach a deal to raise the debt limit and avoid an early August default.

From a dollar standpoint, the two sides are closer to a deal than it might appear.

In talks led by Vice President Joe Biden, negotiators had agreed to reduce discretionary spending, which covers everything from space exploration to pollution control, by between $900 billion and $1.7 trillion over 10 years.

Republicans resisted cuts to military and other security spending sought by Democrats, but Senator Charles Schumer, a Democrat known as a hard-nosed partisan, said on Thursday he thought a compromise was possible in this area.

The two sides had also tentatively agreed on cuts to a wide range of benefit programs, such as farm subsidies, student aid and federal employee retirement plans — a total of roughly $200 billion, according to Democrats.

While we recognize these issues deserve close consideration, the American people are still looking for leadership on this issue. Congress must stop playing partisan politics and address the foremost threat to our economy: government overspending. A quick look at our latest video reveals that Americans overwhelmingly agree – rein in spending to give our economy a chance to recover.

Tags:, , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *