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Monday, July 25, 2011

Lawmakers Play Chicken In Debt Ceiling Debate

Senate Majority Leader Harry Reid (D-Nev.) and House Majority Leader John Boehner (R-Ohio) on Capitol Hill, Washington. (AP)

Senate Majority Leader Harry Reid (D-Nev.) and House Majority Leader John Boehner (R-Ohio) on Capitol Hill, Washington, Saturday. (AP)

Who will blink first? Senate Majority Leader Harry Reid says he is crafting a deal that would cut spending by $2.7 trillion to make up for the $2.4 trillion increase in government borrowing.

Republicans say they doubt those cuts are achievable and House Speaker John Boehner favors a two-step process with $1.2 trillion in cuts and spending caps immediately and a $900 billion debt ceiling increase. That would be followed by the creation of a congressional committee that would find an additional $2 trillion in cuts through 2013.

If an agreement is not reached by Aug. 2, the U.S. won’t have cash to pay all its bills. Economic analysts say that could have a catastrophic impact on financial markets.

Guest:

  • Jay Newton-Small, Time magazine congressional correspondent

Please follow our community rules when engaging in comment discussion on this site.
  • Pach12

    It seems likely that for the first time the US Treasury will default on its obligations to its creditors.

    The major reason for this seems to be that the GOP House caucus is unwilling to permit President Obama to finish his term without a blemish of historical proportions on his record.

    The GOP is rightly concerned about the spiralling national deficit.  If they had had such concerns ten years ago we would be debt free in 2013 instead of wallowing in debt of historic proportions.

    Unfortunately, that is a story of coulda, woulda, shoulda.

    What has to happen next week is for the President to take over the budget under whatever legal means at his disposal and prevent  the default.

    This is an action that is fraught with immense moral hazard as it transfers great power from the House to the White House.

    To remedy this situation the House GOP caucus must recognize the wickedness inherent in Rep. Paul Ryan’s plan to balance the federal budget on the backs of the frail elderly, repent and present a plan that takes money out of the bloated military budget and restores revenue measures to the economy.

    It is tragic that a modern political party can view health care for the frail elderly as a lower budget priority than an expansive overseas military presence or taxing the conspicuous consumption of the idle rich.

  • Катрин Сокольская

    What has to happen next week is for the President to take over the budget under whatever legal means at his disposal and prevent  the default, ist sobad http://maps.google.com.ua/maps/place?cid=5557538971715282121

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