Tags: US | Congress | Debt | Limit

Democrats, GOP at Loggerheads on Deficit

Thursday, 02 Jun 2011 05:50 PM

 

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WASHINGTON (AP) — House Democrats emerged from a meeting with President Barack Obama on Thursday sounding at loggerheads with the GOP over how to reduce the deficit as a crucial deadline for U.S. creditworthiness approaches.

Democratic leaders talking to reporters outside the White House emphasized the need for new revenues as part of any deficit-cutting deal — which generally means new taxes or fees adamantly opposed by Republicans.

They bashed GOP plans to remake Medicare and simultaneously insisted compromise would be reached and acknowledged that the hardest work remains to be done.

"This is a thousand-mile journey that we're on here, and we are taking some first steps," said Rep. James Clyburn, D-S.C.

At stake is an unprecedented default on U.S. debt obligations if Congress fails to raise the federal government's borrowing limit by Aug. 2. The Treasury Department warns failure to act would plunge the economy into crisis.

Republicans are insisting on spending cuts topping $1 trillion as the price for their vote to increase the debt ceiling. The urgency was underscored Thursday as Moody's Investor Service said the U.S. government could lose its sterling credit rating if Congress and the Obama administration don't reach agreement to raise the borrowing limit and reduce deficits over the longer term.

House Democratic leaders insisted they'd get the job done.

"It has to be clear: We're not going to default," said House Minority Leader Nancy Pelosi, D-Calif.

Negotiations on finding spending cuts to meet Republican demands are being led by Vice President Joe Biden, and Democratic leaders involved in the talks said there'd been progress. Areas such as farm subsidies and federal pensions have been targeted for cuts. The Biden group next meets June 9.

"We have made progress on some important issues," said Rep. Chris van Hollen, D-Md., top Democrat on the House Budget Committee. "Have we engaged on the huge, what I refer to as the politically nuclear issues? No, but the reality is that you have to begin a walk with the first step."

Earlier Thursday, the White House pushed back against calls from Republicans for Obama to show more leadership on the deficit and offer more specifics.

"We are at a point now where we don't need new plans," said presidential spokesman Jay Carney, arguing that Obama has already offered one. "We need to find common ground around the shared goal of significant deficit reduction."

A day after House Republicans held their own meeting with the president at the White House, Carney also shrugged off Speaker John Boehner's offer to negotiate directly with the president to speed things along. Boehner said Wednesday that Biden's negotiations aren't making fast enough progress and said he was willing to get involved directly with Obama.

"The vehicle for these negotiations is the talks led by the vice president," Carney said. "And we feel that those talks have been productive." He said Obama "may or may not" talk with Boehner as the Biden negotiations proceed.

The U.S. government hit its $14.3 trillion borrowing limit on May 16, and the Treasury is using a series of extraordinary maneuvers to meet financial obligations. The administration hasn't said how large an increase in the debt limit it will seek, though the last one was around $2 trillion for a year.

Republicans say any increase in the debt limit must be matched by spending cuts of the same magnitude, while the Obama administration argues that the debt limit must be increased regardless.

Obama's plan for reducing the deficit by $4 trillion over 12 years relies half on spending cuts but also eliminates tax breaks and loopholes, whereas Republicans say tax increases are off the table and also contend Obama's plan lacks specifics. The argument has been particularly fierce around Medicare, the giant health insurance program for Americans 65 and older. Democrats are gaining politically from public opposition to a GOP proposal to send future beneficiaries shopping for health insurance in the private market.

Republicans contend that they at least have a plan for Medicare. Republicans dismiss as insufficient Obama's proposals aimed at paring back the program, which include empowering an independent board to recommend policies to reduce the growth of Medicare spending.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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