CQ TODAY ONLINE NEWS
June 2, 2011 – 11:23 p.m.
Debt Goals Set, but Details Elusive
By Paul M. Krawzak and Alan K. Ota, CQ Staff
Despite new urgency from top congressional leaders that the debt ceiling dispute should be resolved quickly, rank-and-file lawmakers remain deeply divided over how to do it.
Lawmakers from both parties want to avoid roiling the markets with a debt showdown. And most agree that something must be done to curb the nation’s deficit.
But after a week of meetings with President Obama and other administration officials, several major roadblocks stand in the way of an agreement, particularly the issue of taxes.
In separate meetings with Obama this week, House Republicans continued to reject any tax increases, while House Democrats said that increased revenues are necessary to get the rapidly rising national debt under control.
GOP lawmakers also want to make cost-saving changes to the Medicare health insurance program, a move that many congressional Democrats have strongly resisted.
Still, House Speaker
Geithner has warned Congress that a failure to raise the $14.3 trillion debt ceiling by that date could result in the U.S. defaulting on some of its borrowing obligations and risk a financial catastrophe.
Adding urgency to the debate was a warning issued by Moody’s Investors Service. The credit-rating agency said Thursday it would downgrade its rating of U.S. debt if the nation defaults, which Moody’s still considers unlikely. Even if the debt limit were raised, which would avoid a default in the near term, Moody’s said that if Congress did not come up with a credible long-term deficit reduction plan, the agency might downgrade the overall outlook for the nation’s credit rating.
Geithner Pitches Plan
Geithner apparently made little headway in selling his plan for raising the debt limit to House GOP freshmen in a get-together with them Thursday.
In his pitch, Geithner warned of the financial catastrophe he believes will await if the government defaults. He said both higher taxes and cuts to entitlement programs are necessary to reduce the deficit, according to lawmakers who attended.
Republicans make up the bulk of the freshman class, with 87 new members, many of whom campaigned on promises to cut spending and rein in the debt. Many of them were dismayed by Geithner’s suggestion that Congress should raise taxes to battle deficits, and they complained that he offered few specifics for changing costly entitlement programs such as Medicare.
“He talked in terms of raising taxes on job creators — he calls them ‘wealthy,’ I call them job creators,” said freshman Republican
Debt Goals Set, but Details Elusive
“There’s a lot of disgust coming out of that room right now, disbelief and disgust,” said
Walsh said he had gone to the meeting because he had not heard Geithner speak. He said the secretary’s “tone” and “demeanor” made his talk sound “like a lecture.”
Walsh said Democrats do not yet understand how serious Republicans are about overhauling federal finances.
“This Republican House will not vote to raise the debt ceiling unless we do something dramatic, and he does not know what dramatic means,” Walsh said. “They don’t sufficiently understand the crisis. They don’t get it. They just don’t get it. It’s disappointing.”
Republicans also took aim at Obama for not offering a detailed deficit reduction plan that is hefty enough to undergo a scoring or analysis by the Congressional Budget Office. In a speech in April, the president offered a broad outline for trimming the deficit by $4 trillion over a dozen years through a combination of spending cuts, tax increases and savings on interest paid on the debt.
“We asked specifically in this meeting, as we asked in the meeting yesterday with the president, for a . . . specific plan that could be scored by CBO,” said
House GOP leaders have been surveying members to determine what changes they support in exchange for raising the debt limit.
Brooks said two of the most popular ideas are a constitutional amendment to balance the budget and substantial spending cuts. Statutory caps on spending also are under discussion but they are not as attractive because they could be suspended by majority vote, Brooks said.
Democrats Also Dig In
During a meeting with Obama earlier in the day, House Democrats urged the president to defend Medicare and Medicaid from what they called Republican efforts to dismantle the programs. They insisted that increased revenues are needed to reduce the deficit.
“We’re going to get the budget, debt limit, resolved,” Minority Whip
Assistant Minority Leader
“We are not where we want to be. And we’ll be some time getting there. But I would hope that by the time we all celebrate Independence Day we will demonstrate that we have shown our patriotism to the American people in a very positive way,” he said.
Debt Goals Set, but Details Elusive
Despite a call from Boehner to get more directly involved in the debt limit negotiations, Obama has kept his distance and emphasized the importance of bipartisan, bicameral negotiations led by Vice President
Boehner said the Biden talks are moving too slowly. The White House has not directly responded to Boehner’s call for direct negotiations. And members of the Biden group still see it as the most likely source of a framework for deficit reduction that could be attached to a debt limit increase.
Democrats defended the Biden talks during their meeting with the president. Clyburn, a member of the Biden group, said the talks were aimed at producing a framework for deficit reduction, not a detailed budget plan.
“We are working on deficit reduction, and what is necessary for us to be able to do an increase in the debt,” Clyburn said. “And the budget and all that stuff will be worked out by others, once we get that frame done.”
Kerry Young contributed to this story.