WASHINGTON -- Senator Jon Kyl (R-Ariz.), who represents the Senate GOP in White House debt talks, said on Tuesday that a bipartisan group of lawmakers had agreed to about $150 billion in budget cuts so far, with an aim to eventually cut trillions more in order to reach a final deal that would raise the debt ceiling.
Kyl said the group “has just gotten started,” and found about $100 billion in cuts by comparing the 2012 budget proposals by President Barack Obama and the House GOP. From there, they agreed to about $50 billion in additional cuts from the two plans, he said.
Still, the lawmakers, led by Vice President Joe Biden, have a long way to go before making a final plan to cut the deficit, Kyl said. They hope to eventually cut $4 trillion, including a “down payment” of cuts equal to the amount the debt ceiling is increased. The Treasury has estimated the debt ceiling would need to be raised by $2 trillion to meet the White House’s request of extending the debt limit beyond the 2012 elections.
“We’re talking in the area of about $150 billion right now,” Kyl told reporters. “We all recognize that we have to do a lot more than that.”
Kyl said the group has worked out few long-term details, with no discussions so far on health care, one of the major drivers of the debt. All entitlements will be subject to discussion, as will defense, he said.
Echoing other Republicans, Kyl said tax measures will not be part of the debt deal because it would “be too complicated to deal with that at the same time that we’re dealing with the debt ceiling.”
Although the current debt ceiling, set at $14.29 trillion, was hit on Monday, Kyl said he thinks a deal will be reached to prevent the government from defaulting on its loans. Treasury Secretary Timothy Geithner told Congress the government could prevent default until about Aug. 2 without Congressional authorization to take on more loans.
So far, no one has discussed a short-term extension on the debt limit to give lawmakers more time to make a deal, Kyl said. A number of lawmakers have said they would not vote to raise the debt ceiling without a plan for major spending cuts to reduce the deficit down the line.
Kyl downplayed concerns over default, saying the markets trust that the government will eventually pay its debts.
“I think that at some point in time the limit will be raised, and I think the United States government will not default on its obligations,” he said. “I think most people in the market know that, and so there’s no reason to panic.”