May 31: With trillions of dollars and potential global economic collapse on the line, Republicans and Democrats are engaged in a high-stakes poker game over raising the U.S. debt ceiling. By most calculations the "drop-dead date" is somewhere around the beginning of August when the existing ceiling must be raised, but Wall Street insiders are warning that investors could get nervous before that if it appears a standoff is imminent.
Normally, raising the debt ceiling, to back up the full faith and credit of the U.S., is a perfunctory act of Congress. But this time, Republicans have insisted that the action must include large-scale program and entitlement funding cuts. At yesterday's White House press briefing, the Press Secretary said, "We also believe quite strongly that we have to raise the debt ceiling -- there is no option to doing that -- and that that will happen, because the economic impacts of not voting to raise the debt ceiling would be calamitous. Both will happen, we believe, and both are happening concurrently and, in many ways, on parallel tracks. So the President looks forward to an agreement on deficit reduction and to the Congress doing what it must do, which is vote to raise the debt ceiling that so that we, as the United States of America, continue to honor our obligations and pay our debts. . ."
Last evening a so-called "clean bill" (H.R.1954) to raise the debt ceiling with no additional spending cuts was purposely offered and defeated in the Republican-controlled House. Republicans are insistent that tax increases, including ending tax breaks for the very wealthy and subsidies for "Big Oil," are "off the table." Conversely, Democrats are arguing for both, and calling for reasoned cuts in entitlement programs.
Following last night's vote, House Speaker John Boehner (R-OH) said, "Tonight's vote shows the House is listening to the American people. The Obama Administration and congressional Democrats have repeatedly asked for a debt limit hike without any spending cuts and budget reforms, and the American people simply will not tolerate it. Raising the debt limit without major spending cuts and meaningful reforms would hurt our economy and destroy more jobs, adding to our debt crisis. . ."
House Democratic leader Nancy Pelosi (D-CA) issued a lengthy statement on the vote, but said in part, "The Republicans have introduced a bill which they have now resoundingly said they will oppose. So where is the good faith effort here? We are, I believe, in good faith efforts -- in a bipartisan way, House and Senate, Democrats and Republicans with Vice President Biden -- to find ways to make sure we don't find ourselves in this situation again. As a mother and as a grandmother, I have absolutely no intention of passing any bills, personal or official, onto my children or grandchildren. And let me say, the Democrats know how to clean up the debt. We've had to do it before. . ."
Today, President Obama met with House Republicans on the debt ceiling issue. Speaker Boehner issued a statement following the meeting saying, "This morning, I released a letter signed by 150 economists who agreed that if we're going to get serious about creating jobs in America, we have got to reduce some of the uncertainty. Some of that uncertainty is caused by the giant debt that's facing our country. The fact is, if we're going to raise the debt limit, the spending cuts should exceed the increase in the debt limit. Otherwise, it'll serve to cost us jobs in our country, and that's not what the American people want. We had a very frank conversation. I thought it was productive. I'm looking forward to more serious conversations about how we reduce the deficit and the debt to get our economy going again and creating jobs."
On May 31, Senator Robert Menendez (D-NJ) and 19 of his colleagues sent a letter to Vice President Biden calling for an end to "billions in Big Oil tax subsidies in any deal to raise the debt ceiling or cut the deficit." In the letter the Senators urged the Vice President to ensure oil companies pay their fair share to help lower the deficit "just as working class taxpayers do." They said closing the tax loopholes would immediately recoup an estimated $21 billion over the next decade, money that currently pads oil company profits while doing nothing to lower gas prices. The NJ Senator recently led efforts in the Senate to put an end to these tax loopholes through the "Close Big Oil Tax Loopholes Act", which was supported by a bipartisan majority of Senators two weeks ago [See WIMS 5/18/11].
Access the 5/31 White House press briefing (click here). Access a release Speaker Boehner following the H.R.1954 vote (click here). Access a release Rep. Pelosi (click here). Access a release Speaker Boehner following the White House meeting (click here). Access the release and letter from Sen. Menendez (click here). Access legislative details including the roll call vote for H.R.1954 (click here). [*Energy/OilGas]
