CQ TODAY ONLINE NEWS
May 24, 2011 – 10:38 p.m.
Moving on Cuts, Not on Revenue
By Joseph J. Schatz and Brian Friel, CQ Staff
Debt limit negotiators have started zeroing in on $1 trillion in spending reductions that they might be able to accept, while a dispute over whether to include higher revenue continues to be a sticking point in the talks.
Those two developments suggest behind-the-scenes negotiations are getting down to specifics, not just broad policy positions, even if the two sides remain far apart.
As negotiators continue looking for deficit-fighting measures that could pass muster with both parties and smooth the way for an increase in the Treasury’s borrowing authority, House Republicans have scheduled a symbolic vote next week on a stand-alone debt limit increase — without spending cuts. That move is meant to give conservatives a chance to vent their frustrations over the nation’s financial state and is expected to be defeated.
Leaving a meeting Tuesday with congressional negotiators at the Capitol, Vice President
That’s been the position of the White House and most Democrats throughout the budget debate. But Biden’s choice of timing and venue seemed designed to send a stronger public message.
Biden added that the group will identify more than $1 trillion in specific budget savings and then discuss budgetary trigger mechanisms that can bring the total package to $4 trillion.
“Everybody knows at the end of the day we’re going to have to make some really tough decisions on some of the big-ticket items, but I think we’re in a position where we’ll be able to get to well above a trillion dollars pretty quick in terms of what would be a down payment on the process,” he said.
Minutes later, House Majority Leader
Even so, Cantor, R-Va., said he was “very confident” that negotiators would reach agreement on spending cuts totaling at least $1 trillion.
Both parties have made clear for weeks that any vote to raise the $14.3 trillion debt limit will need to be accompanied by deficit-fighting measures. Treasury Secretary
Details Still Uncertain
But how negotiators propose to find those savings, and over what time period — and exactly how large a debt limit increase they might be tied to — remain unclear.
Boehner, R-Ohio, has said that the size of the debt limit increase Congress approves should match the size of spending cuts the White House accepts. The government currently borrows about $125 billion per month.
Moving on Cuts, Not on Revenue
Several lawmakers have predicted a multistage process, in which Congress increases the debt limit, and agrees to debt reduction measures, incrementally.
According to a House aide, the Biden group discussed Medicare and Medicaid in the Tuesday meeting. The aide said changes to Medicare and Medicaid, along with cuts in non-health care mandatory programs and discretionary spending, could help achieve $1 trillion in savings.
Biden did not specify what types of revenue changes he was referring to. The White House has proposed a debt reduction “trigger” that would activate automatic spending cuts and reductions in tax expenditures if certain debt targets are not met starting in 2014. And congressional Democrats are pushing for a rollback of tax breaks for oil and gas companies.
To get beyond the trillion dollars in specific, short-term savings the group is working to identify, the negotiators will examine various proposals to set statutory limits on either spending or deficit levels that would force Congress to reduce the debt in the medium and long term. “We’re going to be discussing the trigger mechanisms and how you would do that to get to $4 trillion,” Biden said.
But Republican leaders have not strayed from their anti-tax line thus far. Don Stewart, a spokesman for Senate Minority Leader
Cantor said that a deal could come more quickly than Aug. 2. “I don’t think anybody wants to wait until the end,” Cantor said.
The stand-alone debt limit bill, introduced by Ways and Means Chairman
A vote on such a bill is considered a political necessity for Republican leaders looking to keep conservatives on board as they try to negotiate a broader deal, and could make it easier to strike an agreement later this summer.
Republicans say that the vote is needed to send a message to the White House that a debt limit increase, absent spending cuts, will not have the votes to pass. But that has been clear for weeks, as members of both parties have called for a set of debt reduction measures.
Perhaps more important, the vote will provide House Republicans an opportunity to register a “no” vote on a “clean” debt limit increase. The size of the increase in the draft bill, $2.4 trillion, is the amount of debt added through 2012 by President Obama’s budget, Camp said in a written statement.
Voting for a debt limit increase is always unpopular, and that is even more true this year, given the fervent anti-spending attitude among Republicans. Senate GOP lawmakers have warned that many of their colleagues in the House want to be able to vote “no” on a debt limit increase before an eventual deal is struck.
“The legislation I filed today will allow the House to reject a clean increase in the debt limit, proving to the American people, the financial markets and the administration that we are serious about tackling our debt and deficit problems,” Camp said.
Moving on Cuts, Not on Revenue
Still, one lobbyist argued that Republican leaders must make sure, in internal briefings, that their members understand that the vote is a symbolic one — and that they do not “lock in” their opposition, which would imperil future debt limit votes.
Senate Majority Leader
“I think it sends a terrible message to the international community,” Reid said. “I can’t think of a way that is much more irresponsible than bringing up an extension of the debt limit extension just to show it can’t pass.”
McConnell said the vote would have the opposite effect of what Reid predicted.
“I think it’s important for the markets, for everybody to understand that Congress doesn’t intend to raise the debt ceiling without doing something about the deficit,” McConnell said.
Louis Crandall, chief economist at the New Jersey-based bond market research firm Wrightson ICAP, notes that investors realize that any debt limit increase is going to be accompanied by a package of debt reduction measures.
“It’s just going to be viewed as political theater,” he predicted.
Paul M. Krawzak and Alan K. Ota contributed to this story.