June 30 (Bloomberg) -- The Senate will cancel its July 4 recess to remain in session next week during debt-limit talks, Majority Leader Harry Reid said today.
Reid, a Nevada Democrat, spoke a day after President Barack Obama said Congress shouldn’t be taking vacations while the dispute over the national debt remains unresolved. The House is on vacation this week and returns to Washington July 6.
Democrats and Republicans are at an impasse over how to cut the deficit, which Republicans insist must be done before they will agree to raise the nation’s $14.3 trillion debt limit before an Aug. 2 deadline. Republicans are demanding large spending cuts and no tax increases, while Democrats say higher tax revenue must be part of a “balanced” plan.
Obama’s spokesman rejected an invitation from Senate Minority leader Mitch McConnell to meet with Republicans today at the Capitol. Republicans simply want to “restate their maximalist position,” White House press secretary Jay Carney said at a briefing.
“Americans are tired of the posturing,” Carney said. “They just want us to work.”
Standard & Poor’s would downgrade U.S. debt to junk status in the event of a default, John Chambers, chairman of the company’s sovereign rating committee, said today in an interview with Bloomberg Television.
Obama accused Republicans during a news conference yesterday of siding with corporate jet owners over children and the elderly.
“Before we ask our seniors to pay more for health care, before we cut our children’s education,” the president said, “it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys.”
In asking Obama to go to the Capitol today, McConnell of Kentucky said on the Senate floor he wants the president to hear from Republicans “why what he’s proposing won’t pass” on the deficit issue.
“The president says he wants us to get working,” said McConnell. “I can’t think of a better way than to have him come over and hear directly from our conference about the legislative realities in the Congress right now.”
Carney said the White House holds regular conversations with leaders of both parties, and said Obama won’t cancel two fundraisers scheduled for tonight in Philadelphia.
Reid and other Democratic leaders said they won’t back down from their call for tax increases as part of the deal, adding that wealthy taxpayers must sacrifice in an agreement that also will include spending cuts affecting lower-income Americans.
“If we can’t bring revenue to the table, we’re not going to have a serious conversation” on curbing deficits, said Senator Richard Durbin of Illinois, the No. 2 Democratic leader.
Reid also said he invited Obama and Vice President Joe Biden to meet with all Senate Democrats on July 6. He said Gene Sperling, director of the White House National Economic Council, will meet with Democrats the following day.
“The whole caucus has to be involved” in working out a solution to the debt-limit debate, said Reid regarding his decision to keep the Senate in town.
Reid also faced pressure from Republicans to keep the Senate in session. In May, 46 Senate Republicans signed a letter objecting to any adjournment until Democrats proposed a plan to help restore fiscal balance. Senate Budget Committee Chairman Jeff Sessions, an Alabama Republican and lead author of the letter, this week reiterated the call to keep the Senate in Washington with debt talks continuing.
Democrats continue to press for a large enough boost in the debt limit to get past the 2012 elections.
Charles Schumer of New York, the third-ranking Senate Democrat, rejected the idea of anything other than a long-term deal. He said investors might be wary of purchasing U.S. debt under any extension that lasts just a few months.
“If we were to do a very short-term deal, we don’t know if the markets would accept that,” Schumer said. “Maybe that would send a panic into the markets that we’re all worried about.”
Yet leaders of the Republican-controlled House must contend with a contingent of freshman members aligned with the Tea Party who have expressed skepticism about the urgency of lifting the debt limit.
Senator Tom Coburn, an Oklahoma Republican who last month dropped out of a bipartisan group of senators trying to reach a deficit-reduction deal, said on PBS’s “The Charlie Rose Show” on June 28 that it is increasingly likely House Republicans won’t act on the debt limit by the Aug. 2 deadline.
Senator Kent Conrad of North Dakota, the Democrat who chairs the Budget Committee, said he plans to unveil his budget blueprint next week. The plan, he said, would shave more off the deficit than the leaders of Obama’s bipartisan debt commission envisioned -- their plan projected savings of $3.8 trillion over a decade -- and would include tax increases.
While the U.S. deficit is dominating the debate in Washington, the interest rates the federal government pays to borrow funds have remained low amid a flight of money to safety because of the Greek debt crisis. Yields on 10-year Treasury notes declined from 3.73 percent on Feb. 8 to 2.86 percent on June 24, though they have begun to rise since as the risk of a default by Greece has eased in recent days. Yields on 10-year Treasury notes increased 4 basis points, or 0.04 percentage point, to 3.15 percent at 12:57 p.m. today in New York, according to Bloomberg Bond Trader prices.
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