Lawmakers Making Progress in Debt-Limit Negotiations, Senator Durbin Says

Lawmakers are making progress in their negotiations on reducing the deficit and increasing borrowing limits, a top Senate Democrat said.

“Progress is being made,” Senator Dick Durbin of Illinois, the second-ranking Senate Democrat, said yesterday on NBC’s “Meet the Press” program. “We shouldn’t wait until high noon” to raise the debt ceiling because “it will mean higher interest rates if we don’t.”

Vice President Joe Biden’s bipartisan deficit-reduction group has been holding meetings since May 5 to reach a compromise to clear the way for a vote in Congress to raise the nation’s $14.3 trillion debt ceiling.

Republicans are demanding trillions of dollars in budget savings as a condition of support for expanding the debt limit. Democrats are resisting any changes to Medicare, the long-term driver of the debt. Republicans are balking at tax increases.

“No one on the Republican side will support” higher taxes, Senator Lindsey Graham, a South Carolina Republican, said on “Meet the Press.”

The government may initially adopt a shorter-term solution, Senate Minority Leader Mitch McConnell said on CBS’s “Face the Nation” program yesterday.

“If we can’t do something really significant about the debt ceiling, then we’ll probably end up with a very short-term proposal over a few months, and we’ll be back having the same discussion in the fall,” said McConnell, a Kentucky Republican.

Defense Spending

Defense Secretary Robert Gates said he recognizes the budget talks will lead to “some cuts in things that I care about,” and he hopes that negotiators take the U.S.’s global interests into account.

“We have interests, we have allies, we have partners,” he said on CNN’s “State of The Union.” Gates said he wants to avoid across-the-board cuts similar to what the government did in the 1970s and 1990s. “Everything becomes mediocre” when that happens, he said.

Biden and the six House and Senate lawmakers have begun meeting more frequently to iron out a deal before an Aug. 2 deadline when the Treasury Department projects the government risks defaulting on its obligations. The group plans to meet as many as four times this week.

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net