Negotiators seeking a bipartisan plan to reduce federal deficits are focused on finding a way to agree on a long-term boost in the U.S. debt limit rather than temporary increases, a top Senate Democrat said.
A short-term fix is “quite unlikely,” said Finance Committee Chairman Max Baucus, of Montana. “Nobody wants that,” Baucus, who’s participating in the talks led by Vice President Joe Biden, said after a negotiating session today.
Richard Durbin of Illinois, the Senate’s No. 2 Democratic leader, disagreed, saying he believes a two-step approach is needed to get past an Aug. 2 deadline to raise the debt ceiling. Treasury Secretary Timothy Geithner says failure to meet that deadline would risk a U.S. default on its obligations to bondholders.
Durbin said he would support a deal with an initial “serious down payment” on deficit reduction, combined with a short-term debt-limit increase. He said that could be followed by a larger package to curb deficits that would reach at least $4 trillion and include a bigger boost in borrowing authority.
“We’re just not going to be able to accomplish that by Aug. 2,” Durbin said of a broad debt-reduction plan.
Six lawmakers -- four Democrats and two Republicans -- appointed by congressional leaders are working with Biden, and their meetings continue tomorrow.
President Barack Obama and Biden are scheduled to meet tomorrow in the Oval Office with House Democratic leaders, including Minority Leader Nancy Pelosi, to discuss the status of the talks, according to the White House. The two Democratic House lawmakers in the talks -- Chris Van Hollen of Maryland and James Clyburn of South Carolina -- also will take part, according to Amy Brundage, a White House spokeswoman.
Van Hollen said negotiators will discuss tomorrow budget-process changes that could help enforce a final deficit-reduction plan. He said it still isn’t clear whether the group will reach a deal.
“The good news is that we’re still around the table -- no one has bolted out of the room,” he said. “The question is whether we can bridge our differences.”
House Majority Leader Eric Cantor, a Virginia Republican who’s also part of the group, said yesterday he favors a long-term extension even though lawmakers are divided over whether to increase tax revenue as part of a deficit-cutting plan.
No Multiple Votes
“I don’t see how multiple votes on a debt ceiling increase can help get us to where we want to go,” Cantor said. “If we can’t make the tough decisions now, why would we be making those tough decisions later.”
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.
Today, McConnell sought to minimize any tactical differences between himself and Cantor, telling reporters, “You are reading an awful lot into a discussion about what might happen if we can’t get a grand agreement.”
“My preference is the same as Leader Cantor’s, I hope we have a big, comprehensive, no blue-smoke-and-mirrors solution,” the Kentucky Republican said at a Christian Science Monitor breakfast.
“I don’t know anybody talking about default,” McConnell said.
Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said if a deficit-cutting plan isn’t big enough to “credibly deal with the long-term debt threat, then it would be better to have a short-term extension and have sufficient time to put together a plan that really does deal with the threat.”
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.
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.
‘All About Politics’
“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 yesterday he’s 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.”
‘Not Our Strategy’
“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.”
Meanwhile, Senate Democratic leaders said today they want added spending for infrastructure, clean energy and other areas to help create jobs as part of a deficit-cutting plan. Senate Majority Leader Harry Reid, a Nevada Democrat, said he directed committee chairmen to offer proposals by Aug. 1.
“There are things we need to invest in to get America back to work -- education, training and research,” Durbin said.
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.