June 12 (Bloomberg) -- Congress could help improve the economic recovery by reaching a debt-reduction deal, lawmakers said on Sunday morning talk shows as they face an August 2 deadline that risks sending the U.S. government into default.
“I think that would help calm the markets and help us get to recovery,” Republican Representative Paul Ryan of Wisconsin, chairman of the House Budget Committee, said today on CBS’s “Face the Nation” program, referring to a budget deal that would control future U.S. deficits.
“If we can work together, I think that’s going to raise the confidence level here and around the world, and I think that in itself will have a very positive effect,” Representative Steny Hoyer of Maryland, the Democratic Whip, said on “Face the Nation.”
Congress is haggling over spending cuts and budget reforms as it seeks to reach a deal to raise the $14.3 trillion debt limit. Leaders of two separate bipartisan efforts last week said they are stepping up efforts to reach a debt-reduction deal before the Aug. 2 deadline to expand the debt ceiling or risk a government default. A series of disappointing economic reports has added to the pressure for lawmakers to come to an accord.
Payrolls grew at the slowest pace in eight months in May, Labor Department figures released June 3 showed, while other data show manufacturing has slowed and the economy is decelerating. Moody’s Investors Service on June 2 said if there’s no progress on increasing the debt limit in coming weeks, it expects to place the government’s rating under review for a possible downgrade.
Vice President Joe Biden and Treasury Secretary Timothy F. Geithner pressed Republican lawmakers in a June 10 meeting to accept higher revenue to help curb deficits in talks aimed at achieving a plan to raise the U.S. debt limit before the August deadline, two congressional aides said.
Republicans countered during the private meeting that any tax increase would hurt the economy and couldn’t pass the Republican-led House, said the aides, who spoke on condition of anonymity.
“We set up three meetings next week, so we’re making progress,” Biden told reporters as he left the Capitol, without saying what specifically was discussed during the meeting with six Senate and House members.
House Majority Leader Eric Cantor, who took part in the Biden-led meeting, said a new urgency is evident in the talks after signs that the U.S. job market is slowing. The group is prepared for a “robust series of meetings,” he said.
Not all Republicans agree that the Aug. 2 deadline to reach a budget deficit is urgent.
Default “doesn’t mean that we can’t make payments on Treasury bills or other obligations,” Representative Charles Bass, a New Hampshire Republican, said CNN’s “State of the Union” program today.
“There is a difference between strategic or technical default and default where you really don’t have the economy to support the spending,” Bass said. “We are not at that point yet. We could be. We could be, like some European nations.”
“I think the global economy will understand that the United States has the ability to meet its obligations,” Bass said. “But it’s not going to be able to do it over the long term if we can’t control the growth of government.”
Jobs, Not Deficits
Robert Reich, who served as labor secretary under President Bill Clinton, said jobs, not deficits, should be the top priority right now.
“Yes, there is that uncertainty,” Reich said on ABC News’ “This Week” program. “But, look it, the deficit fight, the deficit is important over the long term. But, right now, the issue is not the deficit. The issue is not the debt ceiling. The issue is jobs. And they’re not the same.”
Reduced taxes and relaxed regulations are the key to restoring the U.S. economy, not additional government spending or more federal stimulus programs, said Senator Richard Shelby of Alabama, the senior Republican on the Banking Committee.
“Stimulus basically doesn’t work for the most part. We’ve tried that,” Shelby said on ABC News’ “This Week” today. “I don’t believe any new stimulus is going to pass Congress. I don’t think it has any credibility,” he said.
Consumer confidence unexpectedly decreased in May to the lowest level in six months as Americans grew concerned over the outlook for jobs and the economy. The Conference Board’s confidence index dropped to 60.8 from a revised 66 reading in April, figures from the New York-based private research group showed on May 31.
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