Senate Majority Leader Harry Reid said he favors setting a cap on the U.S. government’s annual budget deficits as part of a debate over raising the nation’s legal borrowing limit.
“If we’re able to cap deficits, it automatically brings down the debt,” Reid, a Nevada Democrat, said today in a conference call with reporters. “That’s the key to all of this.”
A vote to raise the ceiling on the government’s accumulated debt is the top issue for lawmakers, who return from a two-week recess next week. The Treasury Department is projecting that the government could reach the $14.3 trillion limit as soon as mid- May and could run out of options for avoiding default by early July.
Republican House and Senate leaders have said that they will demand a commitment from President Barack Obama to rein in federal spending before they agree to raising the debt.
Reid said he met with White House officials yesterday to discuss the debt debate, which he said will be far more important than the recent battle over this year’s spending that almost resulted in a government shutdown. The debt issue, he said, “deals with the full faith and credit of the government,” and Democrats are “not going to be drawing any lines in the sand” as it begins.
Reid didn’t elaborate on how caps on deficits might work, saying “there are lots of ways to do it.”
Some past budget deals have included limits on annual deficits paired with required budget changes if they aren’t met to attempt to restore fiscal balance. The 1985 Gramm-Rudman- Hollings Act set annual targets for reduced deficits over five years and required automatic spending cuts if the goals weren’t met. The act was frequently skirted, though, when administration officials charged with imposing cuts if the targets weren’t met would change economic assumptions to improve projected deficits.
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