Negotiators seeking a bipartisan plan to reduce federal deficits said they oppose pairing it with only a short-term boost in the U.S. debt limit.
The group led, by Vice President Joe Biden, also remains divided on including increased tax revenue as part of the plan, a position rejected by Republicans.
“I don’t see how multiple votes on a debt ceiling increase can help get us to where we want to go,” House Majority Leader Eric Cantor said before he joined Biden and other and lawmakers for yesterday’s meeting. “I am not so sure that if we can’t make the tough decisions now, why we would be making those tough decisions later,” said Cantor, a Virginia Republican.
Representative Chris Van Hollen, a Maryland Democrat participating in the talks, said the group is focusing on a long-term extension and that members want to determine by week’s end whether they can bridge enough differences to allow it. Democrats want Republican support to pass a large enough increase in the nation’s $14.3 trillion debt ceiling to get past the 2012 elections.
“Our goal is to see if, at the end of the week, we can reach agreement in principle, or recognize that we can’t bridge our differences in a sense,” Van Hollen said. “We are working very hard to try, by the end of this week, to try and get some sense of where we are.”
The group plans more meetings this week.
Senate Minority Leader Mitch McConnell said June 19 that if all sides couldn’t agree on “something really significant,” Congress might have to approve a short-term increase in the debt limit to let talks continue.
Six lawmakers -- four Democrats and two Republicans -- appointed by congressional leaders are working with Biden on a deal with an Aug. 2 deadline looming. That’s when Treasury Secretary Timothy Geithner says the U.S. would risk defaulting on its obligations to bondholders if the debt limit isn’t increased.
The issues that have divided lawmakers most are Democrats’ bid to increase tax revenue and Republicans’ effort to cut entitlement programs such as Medicare and Medicaid. Earlier talks have focused on areas of easier agreement, including cuts to farm subsidies and possible reductions in retirement benefits to federal workers.
Tax Breaks Targeted
Van Hollen said Democrats are continuing to press for higher tax revenue, which he said should include an end to some corporate tax breaks as well as a boost in levies on higher- income Americans. Cantor said talk of tax increases is more about politics than getting a deal that can pass a Republican- controlled House.
“If it becomes all about politics, you’re not going to get what you need to get done,” Cantor said.
Van Hollen said if the group doesn’t reach a framework later this week, negotiators will be “in touch, one way or another” next week during a week-long House recess. Biden’s group first met on May 5.
Geithner, one of the participants in the meetings, said at an event yesterday that he is seeing “a lot of progress” in the discussions, and that a default is unthinkable.
Republicans insist that spending cuts must exceed any increase in the debt ceiling. Many members of their party were elected last year on a pledge to force dramatic spending cuts.
House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, said June 20 that President Barack Obama wants about a $2.2 trillion increase in the debt limit, about enough to last through the next presidential election in November 2012.
“We see the debt limit as our only opportunity to get some real fiscal responsibility,” Ryan said in an interview on CNBC’s “Squawk Box.”
“Default is not our strategy,” Ryan said. “But we don’t want to see both political parties show the world and the credit markets that we just can’t do anything about spending.”
There is growing pressure to go beyond that level. Senate Budget Committee Chairman Kent Conrad said yesterday that he and other senators want deeper cuts.
Conrad, a North Dakota Democrat, told reporters he will vote against an increase in the debt ceiling that lacks a “credible plan” to cut the deficits. He said an agreement that reduces budget shortfalls by a level equal to the increase in borrowing authority isn’t enough to meet his standard.
Biden said last month he was aiming for a $1 trillion “down payment” on spending cuts, along with a series of longer-term benchmarks that could be enforced to reduce the debt by $4 trillion.
Republicans have insisted they won’t approve any tax increases. Still, Democrats say there is increased hope for a deal on revenue after a June 16 Senate vote in which 33 Republicans voted with Democrats in favor of eliminating a tax credit and a tariff that subsidize ethanol production.
Republican Senator Lindsey Graham, of South Carolina, said on NBC’s “Meet the Press” two days ago that while Republicans won’t allow an increase in tax rates, “many of us would look at flattening the tax code, do away with deductions and exemptions and take that revenue to help pay off the debt.”
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