Vice President Joe Biden said the special congressional committee charged with finding $1.5 trillion in budget savings has a chance at overcoming “very, very difficult” odds to reach an agreement by its deadline.
The 12-member panel has “a shot of getting a deal that would be viewed by Wall Street, be viewed by everyone, be viewed by the international community as a significant alteration of a trajectory of long-term debt,” Biden told reporters traveling with him to Japan on the final leg of a three-nation Asia tour.
Unless the bipartisan committee comes up with a plan to trim the nation’s long-term deficit by the end of the year, the law that set its mandate would trigger $1.2 trillion in across- the-board spending cuts over a decade starting in 2013.
“We still may end up with the trigger being pulled,” Biden said aboard Air Force Two.
The negotiations on trimming the deficit will be held against a backdrop of sluggish economic growth and an unemployment rate at 9.1 percent. President Barack Obama has said he wants Congress to pass measures to boost job creation while considering spending cuts and increases in tax revenue to shrink U.S. debt.
Biden said that a payroll tax cut for businesses is “one of things that’s being considered” as part of the jobs and growth package Obama plans to introduce after Labor Day. Biden said that he had “extensive discussions” with Obama about the plan before he left, without giving details.
He said a payroll tax cut for businesses is “one of the things that I actually discussed with my Republicans colleagues” during debt talks during the summer.
Biden also was critical of Standard & Poor’s, which downgraded U.S. debt to AA+ from AAA following the months-long debate on raising the federal debt ceiling, saying the company is not “best qualified” to make judgments about the U.S. political dynamics behind the debt deal.
S&P’S decision to downgrade the U.S. credit rating for the first time was based on a “political judgment call as to whether or not the parties would or could cooperate” and “in a generic sense, it’s a little out of their lane,” Biden said.
Biden spent the bulk of his trip in China, the biggest foreign holder of U.S. debt. While in public, Biden made statements of reassurance about the stability of the U.S. economy and the safety of Treasuries, he said the issue wasn’t a major focus of his private talks with Chinese leaders.
“There were no probing questions about our economy from them,” Biden said. He said he “didn’t sense it a bit that they needed reassurance about our economic stability.”
Biden said Chinese leaders asked, “what’s going on?” not “assure me now, we’re worried.” He said the Chinese don’t view the U.S. as a declining economic power.
During meetings in Beijing, Biden and Chinese Premier Wen Jiabao both expressed confidence in the U.S. economy, with the Chinese premier saying its stability “is in the interest of the whole world.”
Biden said he also pressed the Chinese to allow their currency to appreciate more.
While the Chinese will “continue to let their currency be revalued marginally, I don’t think we’re going to see any substantial change” in the next 12 months, Biden said in the interview. One of the reasons is that China is going through a transition over the next two years. Vice President Xi Jinping, who Biden met with several times on the trip, is likely to replace Chinese President Hu Jintao in 2013.
The year 2012 will not be “a year of radical change in China,” Biden said.
Biden called the fight that broke out between the Georgetown University basketball team and a Chinese team at Beijing’s Olympic gymnasium “unfortunate,” though he said it is “not a big deal.”
“That kind of thing could happen in a game at home and it wouldn’t have political consequences,” he said.
Biden arrived tonight in Tokyo after a stop in Mongolia. He’s scheduled to visit the region hardest hit by the earthquake and tsunami in March.
© Copyright 2015 Bloomberg News. All rights reserved.