Partisan warfare over the looming debt ceiling crisis escalated Tuesday as GOP leaders once again refused to consider any tax hikes and President Barack Obama warned that, absent a deal, he can’t guarantee older Americans will continue receiving Social Security checks next month.
“There may simply not be the money in the coffers to do it,” Obama said, according to excerpts of a CBS News interview scheduled to air Tuesday night.
“We can’t guarantee — if there were a default — any specific bill would be paid,” White House Press Secretary Jay Carney told reporters Tuesday afternoon.
Top lawmakers from both sides of the aisle are scheduled to resume negotiations with Obama at the White House at 3:45 p.m.
Administration officials have warned that a failure to raise the current $14.3 trillion ceiling by August 2 could trigger a partial default. If Washington lacks the money to meet its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
Negotiators have been debating terms to generate savings of up to $4 trillion over 10 to 12 years, a response to GOP demands for significant spending cuts in exchange for any debt ceiling increase. Democrats are furious, however, that Republicans refuse to consider any tax hikes as part of a deal.
“There are no tax increases on the table,” House Speaker John Boehner, R-Ohio, told reporters Tuesday morning.
“One hundred percent of the problem is on the spending side,” said Rep. Jeb Hensarling, R-Texas, another member of the GOP leadership.
Senate Minority Mitch McConnell, R-Kentucky, said he has lost any hopes of a “grand bargain” with the White House.
“As long as this president is in the Oval Office a real solution (to the country’s fiscal problems) is unattainable,” McConnell said. Obama “will do almost anything to protect the size and the scope of Washington D.C.’s burgeoning bureaucracy.”
Democrats also dug in their heels.
Republicans want to “protect the wealthiest among us — the millionaires and billionaires — and hurt the average, middle-class senior citizen,” said Sen. Chuck Schumer, D-New York. “This approach is not balanced. It is not fair. It is not moral, and it will not be accepted.”
As the rhetoric intensified, Treasury Secretary Tim Geithner warned that time is running out. The secretary said he wants to see a deal to raise the debt limit and cut projected spending by the end of this week — or next week at the latest — so that Congress will have enough time to turn the deal into law.
“We know we don’t have a lot of time,” Geithner said. “Default is not an option.”
Obama ruled out the possibility of signing a short-term extension of the federal debt ceiling Monday, insisting that the time has come to tackle the nation’s most pressing fiscal problems in a comprehensive way requiring bipartisan compromise on both taxes and spending.
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11 Responses
According to Austan Goolsbee, Chairman of the U.S. Council of Economic Advisers, if Congress fails to raise the debt ceiling, the “impact on the economy would be catastrophic.” Even Republican Sen Lindsey Graham agrees – saying that failing to raise the debt ceiling “would be very bad for the position of the United States in the world at large.”
Those who walk around preaching the contrary seem to be as well informed as are
“Conservative” Jews who walk around mouthing that “well, everything is up for interpretation” as they justify driving to their “shuls” on Shabbos.
I am not an economist…but I read what economists say…established economic authorities…l’havdil, the Gedolim of the discipline. All of them agree with
Goolsbee.
Once you mention Social Security, a deal will be done. There are too many votes at stake. Both sides will try to spin it so they look like they caved in rather than let people go without their Social Security checks. A deal will be done within two days.
Obama and company are playing the audience for the 2012 presidential race instead of dealing with real issue of how much MR OBAMA has personally raised the debt by his failed policies.
Mr. Obama sign off on a short term bill and avoid a global financial catastrophe.
1. Don’t “even” me with anything from Lindsey Grahamnesty. He is a RINO.
But wait, but wait!!! Wasn’t social security supposed to go in a lock box for us to use when we needed it?!?!?? Who stole the money!!
Also, the Big Fat Liar In Chief is WRONG again! The debt limit has NOTHING ZERO ZILCHO to do with entitlements. It has to do with bonds etc. If Barack Hussein Obama mmmm mmmm mmmm sees to it that Social Security, Medicare, Medicaid, military doesn’t get paid (which legally he can’t do anyway but “legal” isn’t in his dictionary anyway), it is on HIS head.
After watching the president aka baby in chief over the last few weeks on this, I called my credit card company today and asked for a credit increase so I could pay my bill. They laughed at me so I asked what’s the difference between me and Obama. They hung up. We should hang up on Obama aka Carter2.
“After watching the president aka baby in chief over the last few weeks on this, I called my credit card company today and asked for a credit increase so I could pay my bill. They laughed at me so I asked what’s the difference between me and Obama.”
Actually, what’s going on is the equivalent of you calling up your credit card company and telling them while you have no problem getting the cash to pay your bills (and at favorable interest rates), you’d rather just default for ideological reasons. I suspect they’d have hung up on you anyway, but they would probably not be laughing about it.
Social Security, unlike most government programs, is funded from a trust fund that won’t go broke for at least another ten years and perhaps much longer depending on factors such as retirement age, birth rate (the more the better), death rate (the more the better), and immigration (the more the better).
The money for social security is totally unaffected by the overall debt limit. Whether things such as civil service salaries, WIC, aid to states, Medicaid, etc., will be paid if the government goes broke are up for debate – but social security isn’t an issue at this time.
akuperma,
Wrong about Social Security. That trust fund is invested entirely in government bonds. If the bonds are no good, which is what will happen if the Republicans don’t cave, no Social Security.
Charlihall:
The bonds don’t become invalid if the debt limit isn’t raised. At most, it means that new money received by Social Security from payroll taxes will have to be deposited at zero interest rather than invested in new bonds. Since the trust fund is now shrinking, even that won’t be a problem.
At issue isn’t a real “default” – meaning the US renounces its national debt (similar to the Soviet Union announcing it wasn’t liable for Czarist Russia’s debts). Rather, the Treasury won’t be able to spend more than it is taking in – which at present means it will have to cut its expenses by 40% – it will be forced to reduce spending to the level of taxes. Social Security is unaffected since they don’t rely on borrowing money to pay benefits (though the employees of Social Security might not get paid).
Reducing expenditures more than 40% while maintaining legal obligations means blowing up the entire federal government. You’ve abolished the army, navy, and air force, and left our soldiers in Afghanistan to die. You’ve abolished the Coast Guard, opening our shores to drug smugglers. You’ve abolished the border patrol, letting anyone into the United States who wants in. You’ve laid off all the guards at Gitmo, letting Khalid Sheikh Muhammed go free. You’ve closed all federal prisons, letting drug kingpins go free.
People like Mark Levin seem to think this would all be fine.
Just curious – how much will we save if we pull out of Iraq and Afghanistan> We have accomplished the objectives tha W stated when he started these wars.
Also, how about having the various government agencies repay the money they have borrowed from the Social Security trust Fund over the years?
Comment No. 8 is a sterling example of the colossal level of ignorance about the approaching deadline for an increase in the US debt ceiling. No. 8 states that a failure to pay interest or principal on US bonds and notes is not a “real” default. Instead, No. 8 posits, a default occurs only when the US “renounces” its debts, as the Soviet Union renounced the debts of Czarist Russia. That is nonsense. That is wrong beyond belief. If in fact the US does not pay its bonds and notes as they come due, interest rates on US bonds – interest payable and paid by taxpayers – will spike upward and stay there for a long while. And since mortgage interest rates, commercial borrowing rates, credit card interest rates and most other interest rates are, directly or indirectly, tied by or affected by, interest rates on US debt obligations, all interest rates will spike upward. That will be crippling for many individuals and for the US economy as a whole.
The Republicans in the House of Representatives have chosen a horrible time to play “chicken” with US credit, to advance a set of policies – no tax increases for the rich, benefit cuts for Medicare and Social Security – that are themselves unsound in the present economic straits. The added cost of higher interest rates will only make economic improvement over the next 12 – 18 months (if not longer) more unlikely, which may be exactly what they want anyway, given the political events set for that time period (e.g., presidential election). Make no mistake – this is a major attack by the Republicans on the American middle class. Unless the Congressional Republicans can be persuaded that a default will not fulfill their political goals, enough of them are sufficiently ignorant or irresponsible to drive America over the cliff.