WASHINGTON -- With the United States government set to begin the process of defaulting on its debts on Aug. 2, according to the Treasury Department, the White House is working with lawmakers on a deal to raise the nation's debt limit in exchange for major spending cuts and, potentially, revenue increases to shrink the deficit.
Leaders from both chambers and parties are meeting with the administration nearly every day to work out a deal, after meetings on July 10 bore no agreements on whether to raise revenues as part of a debt-reduction plan.
President Barack Obama gave lawmakers 10 days to come to an agreement, insisting he will call daily meetings until a deal is reached to raise the debt ceiling. The Treasury hit its debt limit -- most recently set by Congress at $14.29 trillion -- on May 16, but is using "extraordinary measures" to avoid a U.S. default for now. Treasury Secretary Timothy Geithner warned that failing to raise the debt ceiling would be disastrous to the economy, telling Sen. Michael Bennet (D-Colo.) in a May 13 letter that rapidly reducing federal outlays in the event of default "would likely push us into a double dip recession."
Although lawmakers could vote to raise the debt ceiling without preconditions, many members of Congress have said they will not approve an increase to the federal borrowing limit unless there is a longterm plan to deal with the debt.
Lawmakers are currently looking to build off of bipartisan talks led by Vice President Joe Biden, which fell apart in June over the issue of tax increases in a final deal. Those talks had reached agreement on about $2.4 trillion in cuts, which House Republicans have said they would now be willing to accept rather than a "grand bargain" that saves about $4 trillion.
In addition to major spending cuts, the House GOP has also pushed for major changes to Medicare -- including those laid out in Rep. Paul Ryan's (R-Wis.) 2012 budget proposal -- to be as part of a final debt ceiling deal. Although Senate Majority Leader Harry Reid (D-Nev.) said in June that Medicare cuts are off the table, Democrats have since signaled they would allow for some changes to the retirement insurance program, provided they be on the delivery-side as opposed to the beneficiary side.
House Speaker John Boehner (R-Ohio) has said the lower chamber will not approve a bill that includes tax increases, a option that Democrats have insisted should be on the table. Democratic leadership is pushing for an end to subsidies and tax preferences for major oil and gas companies and individuals that make more than $500,000 per year.
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08/02/2011 5:13 PM EDT
Pelosi: Democrats 'Saved The Day' On Debt, Now Time For Jobs
House Minority Leader Nancy Pelosi (D-Calif.) praised Democratic lawmakers for bringing the country "back from the brink of default" and said now is the time to shift attention to jobs.
"We just completed a very lively leadership meeting of the House Democrats, where we talked about ... the necessity of Democrats to save the day yesterday, pulling our country back from the brink of default," Pelosi said during a Tuesday press conference.
"It was a bitter pill for us to swallow, but we did," Pelosi said of the final debt deal. "And as we did, we saved Medicare, Medicaid and Social Security."
With that bridge crossed, the next step is refocusing Congress on job creation, she said.
"Jobs, jobs, job, jobs, jobs. You cannot say it enough," Pelosi said. "I really liked what Willie Nelson said, or at least he was quoted as saying -- the American people are more concerned about a ceiling over their head than raising the debt ceiling. We know we need to do both."
The Minority Leader ducked questions about when she would announce her picks for the newly created "Super Congress," a 12-member panel of lawmakers who will decide where to make up to $1.5 trillion in spending cuts. Pelosi also wouldn't say if she will require her picks to insist on new revenues in addition to cuts. The goal, she said, is to strike a balance in cuts and spending while preserving entitlement benefits.
"Whoever is at that table will be someone who will fight to protect those benefits," she said.
-- Jennifer Bendery
08/02/2011 3:42 PM EDT
AARP Alarmed By Secretive Super Congress
AARP is relieved that the debt deal did not hack into Medicare, Medicaid or Social Security, but the lobby for older Americans is worried all those programs could get whacked by a secretive super committee that's supposed to find an extra $1.5 trillion in deficit cutting.
The super committee -- made up of 12 lawmakers who will bypass the normal legislative process and produce a bill that cannot be amended -- will have to work quickly, coming up with a massive cutting plan by Thanksgiving.
"We are concerned that a fast-track committee process will deny Americans a voice in the discussion about critical tax, health and retirement issues," said AARP President Barry Rand in a statement.
“AARP believes that the American public deserves a seat at the table in any forum, including the newly created super committee, that discusses potential changes to these critical programs," Rand added. "We believe that our nation’s leaders should work together to strengthen health and retirement security for current and future generations.”
-- Michael McAuliff
08/02/2011 3:01 PM EDT
Top House Democrat Laments That Congress Can't Do Its Job
Rep. Rosa DeLauro (D-Conn.), one of the only Democratic leaders to vote against the debt bill, lamented on Tuesday that the new law includes the creation of an all-powerful "Super Congress" of 12 hand-picked lawmakers who can decide where to make up to $1.5 trillion in future spending cuts.
"I think you've asked a very important question," DeLauro said, when asked why lawmakers created a special committee to do what should be Congress' job. "My preference obviously would be to have Congress take on these responsibilities. But clearly there's a view that there's an impasse and therefore, hopefully, a commission can do that."
DeLauro, a co-chair of the Democratic Steering and Policy Committee, split from other Democratic leaders in voting against the debt bill, which increases the government's spending power by $2.4 trillion through 2013 while imposing as much as $1.5 trillion in cuts, mostly from non-defense spending. House Minority Leader Nancy Pelosi (D-Calif.), House Minority Whip Steny Hoyer (D-Md.) and Assistant Minority Leader James Clyburn (D-S.C.) all voted for the bill.
"For me, voting against the bill yesterday was about, given what is in this piece of legislation, it makes these opportunities for economic investments and economic growth all the more difficult," DeLauro said. "If we choke off all of our opportunities for investment, we will take this nation backwards instead of forward."
-- Jennifer Bendery
08/02/2011 2:04 PM EDT
Obama Signs Debt Deal
|@ CNNPolitics : WH says President Obama has now signed the debt ceiling bill into law|
08/02/2011 1:47 PM EDT
AARP 'Relieved,' 'Pleased' With Debt Deal
Senior citizens lobbying force AARP is happy that Social Security checks will not be interrupted by a debt ceiling standoff and that future benefits won't get automatically clobbered if the 12-member so-called super Congress fails to reach an agreement on deficit reduction.
"We are relieved that Congress has acted on a bipartisan agreement to address the debt ceiling and prevent default to ensure that seniors will continue to receive their Social Security checks and have access to health care," AARP CEO A. Barry Rand said in a statement. "Going forward, we are pleased that Social Security, Medicaid and Medicare benefits are protected if the so-called 'super committee' fails to reach an agreement later this fall, but we will remain vigilant in our efforts to protect the health and retirement security of seniors and future retirees. We are concerned that a fast-track committee process will deny Americans a voice in the discussion about critical tax, health and retirement issues. We also are concerned about the potential use of a trigger that would arbitrarily cut provider payments under Medicare, which could unfairly shift costs to seniors."
-- Arthur Delaney
08/02/2011 1:44 PM EDT
Obama: Let The Pivot To Jobs Begin
Speaking just minutes after the Senate passed legislation to raise the debt ceiling -- removing the last political hurdle for that bill's passage – President Obama delivered a speech in the Rose Garden in which he once again pleaded for a renewed focus on jobs.
Sounding at times exasperated that the political conversation had veered so swiftly to the topic of austerity, Obama urged Congress to present him with job-creating bills as soon as it returned from its August recess. The specifics were pretty much the same as the White House has pushed for weeks if not months: free trade agreements, patent reform, an infrastructure bank, regulatory changes and the extension of the payroll tax cut and unemployment benefits.
"Growing the economy isn’t just about cutting spending, it is not about rolling back regulations that protect our air and water and keep people safe. That is not how we are going to get past this recession. We are going to have to do more than that," he said.
"There already is a quiet crisis going on in the lives of a lot of families and a lot communities all across the country. They are looking for work and they have been for a while ... that ought to compel Washington to cooperate, that ought to compel Washington to compromise and that ought to compel Washington to act."
Coming so soon after both the president and a large portion of the Democratic party signed off on a bill that takes roughly $2.4 trillion out of the economy in the next 10 years, it was hard to imagine that the remedies being offered would have much of a cumulative effect. Moreover, a "pivot" to jobs was already tried unsuccessfully after the tax cut debate at the end of 2010 and the government shut down debate in the spring of 2011.
But Obama's speech was more about establishing the proper tone than it was about forging out new legislative remedies. With the debt ceiling debate now over until after the 2012 election, the major discussion shifts back to what, if anything, government can do to spur economic growth. One portion of that argument will come when Congress must pass a budget to fund the government by the end of September. But the White House will likely try and create some sort of defining contrast between the president and his Republican critics well before then.
-- Sam Stein
08/02/2011 1:42 PM EDT
Bill Heads To Obama's Desk
HuffPost's Michael McAuliff and Elise Foley report on the Senate vote:
The Senate did its part Tuesday to end a months-long standoff and raise the debt ceiling, passing a bill that dramatically cuts spending and creates a new "super committee" that will slash budgets even more.
The Senate approved the measure 74 to 26. The bill will go to President Obama's desk with little time to spare; Treasury Secretary Timothy Geithner has said that the country would begin to default on its obligations at midnight if a bill was not passed by then.
Although Democrats had many complaints about the bill, they supported it overwhelmingly, with 45 voting "yes" and six voting "no." Twenty-eight Republicans voted in favor of the bill, meanwhile, while 19 voted against it. The Senate's two Independents, Sens. Joe Lieberman (Conn.) and Bernie Sanders (Vt.) voted "yes" and "no," respectively.
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08/02/2011 1:02 PM EDT
Harry Reid Speaks After Debt Deal Vote
"Neither side got what they wanted. ... That's the way our system works. That's what compromise is all about."
08/02/2011 12:31 PM EDT
Senate Passes Debt Ceiling Deal
The final vote is 74-26, more than the 60-vote majority required for passage.
08/02/2011 12:00 PM EDT
Debt Deal Polls: Leaders Behaving 'Like Spoiled Children'
HuffPost's Mark Blumenthal reports:
An overnight poll conducted by CNN and ORC International finds more Americans disapprove (52 percent) than approve (44 percent) of what the pollsters described as "an agreement between Barack Obama and the Republicans and Democrats in Congress [that] would raise the federal government's debt ceiling through the year 2013 and make major cuts in government spending over the next few years."
The poll delved deeper into specific aspects of the agreement and found support for spending cuts but opposition to the lack of tax increases for wealthy Americans. Specifically,
- 65 percent approve of $1 trillion in cuts in government spending over the next 10 years (30 percent opposed)
- 60 percent disapprove of the fact that the agreement does not include any tax increases for businesses or higher-income Americans
The survey also included an unusual question that dramatizes the way Americans feel about the overall debate. More than three out of four respondents said elected officials in Washington that have dealt with the debt ceiling debate have behaved "mostly like spoiled children" (77 percent) rather than "responsible adults" (17 percent).
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What happens if the U.S. defaults? See the slideshow below.