Tuesday, July 26, 2011

Government Deadlock: No Agreement On Debt Crisis

Jul 25: In a nationwide, primetime address President Obama outlined two approaches to the looming debt crisis and indicated that with just eight days to go, the nation faces an unprecedented financial crisis if the issue is not resolved. He stressed the need for a bipartisan solution and reminded Washington that compromise is not "a dirty word." He spoke to the frustrations ordinary Americans feel with the political process. Reactions from Republican leaders indicate no change in their position and the Federal government deadlock prevails.
    The President said, "The first approach says, let's live within our means by making serious, historic cuts in government spending.  Let's cut domestic spending to the lowest level it's been since Dwight Eisenhower was President.  Let's cut defense spending at the Pentagon by hundreds of billions of dollars.  Let's cut out waste and fraud in health care programs like Medicare -- and at the same time, let's make modest adjustments so that Medicare is still there for future generations.  Finally, let's ask the wealthiest Americans and biggest corporations to give up some of their breaks in the tax code and special deductions. This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt.  And the cuts wouldn't happen so abruptly that they'd be a drag on our economy, or prevent us from helping small businesses and middle-class families get back on their feet right now. . ."
    Then he continued, "The only reason this balanced approach isn't on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a different approach -- a cuts-only approach -– an approach that doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all.  And because nothing is asked of those at the top of the income scale, such an approach would close the deficit only with more severe cuts to programs we all care about –- cuts that place a greater burden on working families.

    "So the debate right now isn't about whether we need to make tough choices.  Democrats and Republicans agree on the amount of deficit reduction we need.  The debate is about how it should be done. Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don't get.  How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for?

    "That's not right.  It's not fair.  We all want a government that lives within its means, but there are still things we need to pay for as a country -– things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research. And keep in mind that under a balanced approach, the 98 percent of Americans who make under $250,000 would see no tax increases at all.  None. . ."
    Despite the President's pleas, House Speaker John Boehner (R-OH) held firm on the Republican stalwart position of no tax increases and/or no revenue increases. Speaker Boehner said, "Where most American businesses make the hard choices to pay their bills and live within their means, in Washington more spending and more debt is business as usual. I've got news for Washington – those days are over. . . What we told the president in January was this: the American people will not accept an increase in the debt limit without significant spending cuts and reforms. And over the last six months, we've done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country. . .something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track. . .
    "The president has often said we need a 'balanced' approach -- which in Washington means: we spend more. . .you pay more. Having run a small business, I know those tax increases will destroy jobs. The president is adamant that we cannot make fundamental changes to our entitlement programs. As the father of two daughters, I know these programs won't be there for them and their kids unless significant action is taken now. The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen. . .
    ". . .this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill – one that was developed with the support of the bipartisan leadership of the U.S. Senate. I expect that bill can and will pass the Senate, and be sent to the President for his signature. If the President signs it, the 'crisis' atmosphere he has created will simply disappear. The debt limit will be raised. Spending will be cut by more than one trillion dollars, and a serious, bipartisan committee of the Congress will begin the hard but necessary work of dealing with the tough challenges our nation faces. . ."

    Many Washington inside observers wondered why the President was still discussing the idea of revenue increases, when apparently the White House has indicated it would support a proposal by Senate Majority Leader Harry Reid (D-NV) which calls for $2.7 trillion in cuts and no revenue increases. Considering the two basic proposal currently on the table in the House and Senate, neither of which call for any revenue increases; it would appear that Republicans have won a significant portion of the battle. It seems the only major issue yet to be resolved is whether the debt ceiling increase will be "short term" (6-9 months) which Republicans are supporting; or, "longer-term (through 2012) which the President and Democrats are supporting.

    Frustrated by the stalemate, President Obama said, "The American people may have voted for divided government, but they didn't vote for a dysfunctional government.  So I'm asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know. If you believe we can solve this problem through compromise, send that message."

    Access an overview, video and full text of the President's remarks (click here). Access the full text of Speaker Boehner's remarks (click here). Access the Senate Democratic proposal (click here). Access the House Republican proposal (click here). [#All]