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Saturday, July 20, 2024

Don’t look for any cooperation on solving debt crisis

Nancy Pelosi and John Boehner: Ready to do battle (AP Photo/Susan Walsh)
Nancy Pelosi and John Boehner: Ready to do battle
(AP Photo/Susan Walsh)

Congressional leaders on Sunday showed no signs of emerging from their corners to resolve the next step in the financial crisis, with Democrats still talking about higher taxes on the wealthy and the Senate’s top Republican suggesting that a crippling default on U.S. loans was possible unless there were significant cuts in government spending.

“It’s a shame we have to use whatever leverage we have in Congress to get the president to deal with the biggest problem confronting our future, and that’s our excessive spending,” said Sen. Mitch McConnell, R-Ky.

Last week’s deal to avert the combination of end-of-year tax increases and spending cuts known as the “fiscal cliff” held income tax rates steady for 99 percent of Americans but left some other major pieces of business unresolved.

By late February or early March, the Treasury Department will run out of options to cover the nation’s debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling. Economists warn that a default could trigger a global recession.

Also looming are deep automatic spending cuts expected to take effect at the beginning of March that could further erase fragile gains in the U.S. economy. Then on March 27, the temporary measure that funds government activities expires, and congressional approval will be needed to keep the government running. It’s one more chance to fight over spending

Lawmakers said debt talks will consume Congress in the coming weeks, likely delaying any consideration of an expected White House proposal on gun restrictions in the wake of the Connecticut school shooting.

Republicans say they are willing to raise the debt ceiling but insist any increase must be paired with significant savings from Medicare, Medicaid and other government benefit programs. President Barack Obama has said he’s willing to consider spending cuts separately but won’t bargain over the government’s borrowing authority.

“One thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up,” Obama said in his weekly radio and Internet address.

Democrats said further tax increases for the wealthiest Americans were still possible as Congress looks to close the gap between revenues and expenditures. Democrats point out that Obama has already agreed to significant spending cuts, and that the latest deal only gets the nation to about half of the revenue it needs to resolve the red ink.

“Trust me, there are plenty of things within that tax code — these loopholes where people can park their money in some island offshore and not pay taxes. These are things that need to be closed. We can do that and use the money to reduce the deficit,” said Illinois Sen. Dick Durbin, the second-ranking Senate Democrat.

House Democratic leader Nancy Pelosi of California said she, too, wants to put “everything on the table from the standpoint of closing loopholes.”

But McConnell bluntly declared that the “tax issue is over” after last week’s agreement.

“We don’t have this problem because we tax too little; we have it because we spend too much,” McConnell said.

Making the rounds on the Sunday talk shows, McConnell was asked repeatedly whether Republicans were prepared to see the nation default on its spending obligations. McConnell said that wouldn’t be necessary, so long as Obama agrees to the spending cuts.

But at one point, when asked by NBC’s David Gregory whether the GOP strategy will be to hold the debt ceiling “ransom” in exchange for spending cuts, McConnell said it was a “shame we have to use whatever leverage we have” to get the president’s attention.

“None of us like using situations like the sequester (automatic across-the-board spending cuts) or the debt ceiling or the operation of government to try to engage the president to deal with this,” McConnell said.

Sen. Lindsay Graham, R-S.C., didn’t dismiss the idea of allowing a partial shutdown of government until an agreement can be reached. Texas Sen. John Cornyn and other Republicans have floated the idea of a shutdown as a way of winning deeper spending cuts.

“I believe we need to raise the debt ceiling, but if we don’t raise it without a plan to get out of debt, all of us should be fired,” Graham said.

Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, said the Republican strategy amounted to: “Give us what we want … or we’re going to tank the United States economy.”

Pelosi said she believes the president has enough authority under the 14th Amendment to raise the debt ceiling without Congress’ blessing. But the White House has said previously that it does not believe that the amendment — which says the “validity” of public debt shouldn’t be questioned — gives the president that power.

McConnell spoke on NBC’s “Meet the Press,” ABC “This Week” and CBS “Face the Nation.” Pelosi was on CBS. Durbin and Graham appeared on CNN’s “State of the Union” and Van Hollen was interviewed on “Fox News Sunday.”

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2 thoughts on “Don’t look for any cooperation on solving debt crisis”

  1. The “debt ceiling crisis” is completely manufactured: All it can do is to prevent the Treasury Department from spending for programs that Congress already authorized. It is like running up charges on your credit card, and then throwing the bill in the trash because it’s too high!

    If members of Congress want to cut spending on some program, then they should use the constitutional mechanism they already have: Don’t pass that bill to begin with.

    The President needs to stop letting Congressional Republicans use the debt limit for extortion. When they refuse to raise it, then he will have two conflicting sets of instructions from Congress. 1) Pay for the programs they already authorized. 2) Don’t pay.

    He will have to decide exactly which things to fund and which things to defer. And that should be rather hilarious, since that will effectively mean that Congress is granting him one of their most cherished powers! Nothing would stop him from limiting Social Security payments to $700/month (which would have all the Republican well-off retirees howling for their Congressmen’s blood) or cutting off all federal payments just to Red states.

  2. How to get out of debt:

    Step 1: End the wars, recall the troops, close the permanent bases around the world. $1,200,000,000,000 savings per year, more than ending Medicare/Medicaid entirely combined.

    Step 2: End the “War on Drugs,” pardon those incarcerated for non-violent drug offenses, tax and regulate recreational drugs like alcohol. $90,000,000,000 savings per year, increased tax revenue from drug tax up to $100,000,000,000 per year. (Assumes an illegal drug trade of $500 billion or more per year.)

    Step 3: Tariff imports to spur national growth and end trade imbalances caused by currency manipulation and lopsided trade agreements.

    Step 4: End the income tax. It’s no longer needed without wars, drug tax, and a tariff on goods imported generating surplus revenue.

    Step 5: End the Federal Reserve and fiat currency.

    Now sit back and enjoy the boom. Are you listening America?

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