The Sorry History of Debt Ceiling Negotiation
Usually, a negotiation involves two sides giving and taking and inching closer to agreement. In Washington, it means barely budging for seven straight months. A primer on how to not reach a deal.
Dec. 1, 2010
The bipartisan deficit commission headed by Republican Alan Simpson and Democrat Erskine Bowles proposes a $4 trillion reduction through 2020. It considers cuts to discretionary and entitlement spending as well as raising tax revenues through closing loopholes and certain subsidies.
The bipartisan “Gang of Six” begins meeting to discuss long-term debt reduction.
GOP Representative Paul Ryan unveils a plan to cut $6.2 trillion over 10 years by trimming Medicare, Medicaid, food stamps, and other programs. It would also cut individual and corporate taxes.
President Barack Obama lays out a plan to save $4 trillion over 12 years. It calls for trims to defense and other government programs along with revenue increases, including ending the Bush-era tax cuts on high-income earners.
Vice-President Joe Biden convenes his own bipartisan debt meeting; House Speaker John Boehner and House Majority Leader Eric Cantor shelve plans to privatize Medicare.
GOP Senator Jon Kyl says he and Cantor oppose Obama’s calls to overhaul the U.S. tax code, arguing it could mean higher taxes for some.
Senate Majority Leader Harry Reid says any deal will require bipartisan support and no one should be “drawing a line in the sand” about what can and can’t be included.
Senate Minority Leader Mitch McConnell says he wants cuts to entitlement programs such as Medicare and Medicaid as a condition for his support to increase the debt limit.
GOP Senator Tom Coburn leaves the Gang of Six, saying the group failed to reach agreement over cuts to entitlement programs, including Medicare and Social Security.
The Biden group tentatively agrees to $200 billion in cuts to spending such as farm subsidies but avoids trimming entitlement programs.
The House rejects a “clean” vote to pass a debt ceiling increase without companion spending cuts, sealing the need for continued negotiations.
Treasury Secretary Timothy Geithner pushes Republicans in Biden’s group to accept tax increases, including proposals to eliminate tax loopholes.
Thirty-four Senate Republicans vote to end tax breaks on ethanol. Although the bill does not pass, it signals some Republicans are willing to accept limited revenue increases.
Democrats give Republicans in Biden’s group a “menu” of revenue-raising options, including cutting oil and gas subsidies, special-interest tax earmarks, and breaks for corporate jet owners. Republicans publicly continue to oppose tax increases.
Obama and Boehner play a round of golf in a gesture of cooperation.
The Biden talks break down, with Cantor saying Democrats want too many tax increases.
House Minority Leader Nancy Pelosi says any debt deal must reduce “tax subsidies” such as breaks to oil companies.
Senator Dick Durbin and Representative Sander Levin, both Democrats, propose closing a loophole that allows companies to delay paying taxes on profits earned overseas.
McConnell says he hasn’t “given up hope” for a major debt-cutting deal.
Obama meets with congressional leaders and tries to broaden the debate to reach an ambitious “grand bargain”—a new $4 trillion deal that combines cuts to entitlements with revenue increases. Boehner signals he’s willing to discuss it.
The grand bargain sours when Boehner, under pressure from fellow Republicans, says he cannot accept tax increases. Congressional Democrats meanwhile balk at cutting entitlements. Boehner narrows his ambitions and suggests the two sides try to find $2 trillion to $2.5 trillion in savings.
McConnell tries to cool fears of a default. “Nobody is talking about not raising the debt ceiling,” he says.
Obama continues to press for a large-scale reform, while Cantor insists the deal can’t result in any net increase in revenue.
McConnell calls Obama’s debt proposals “smoke and mirrors” and proposes a “last choice option” that would allow the President to raise the debt limit unilaterally by $2.4 trillion in installments if he proposes spending cuts to offset the costs. Several leading Republicans, including Boehner, express positive views of the plan. Others accuse McConnell of giving up.
The deadline, when Treasury expects the government to “exhaust its current borrowing authority” and begin defaulting on its debts—unless a deal is reached.