With the holiday weekend over and Congress back in session this week, President Obama is once again challenging Republican leaders to hammer out a deal on the debt ceiling in short order.
The nations credit limit now standing at $14.3 trillion needs to be addressed no later than early August or, according to the Treasury Department, the U.S. will no longer be able to pay its bills. Democrats and the White House have set July 22 as their target date in order to give Congress time to debate and pass a bill.
The only problem is Republicans and Democrats remain deeply divided on how to arrive at a deal. President Obama remains insistent that taxes on the wealthy be raised. In his budget remark last week, the president said, If we choose to keep those tax breaks for millionaires and billionaires, or for hedge fund managers and corporate jet owners then well have to make even deeper cuts somewhere else.
Many Republicans would be fine with taking such an approach.
Republican leaders remain adamant any deal not include any tax increases but are open to ideas for generating additional revenues from changes in the tax code. However, both sides are in agreement that a deficit-cutting deal is required to win the necessary votes for passage.
The Obama administration is content on wanting to increase the limit by more than $2 trillion, enough to last the 2012 elections. In an effort to pressure Republicans, Democrats, led by President Obama, went on the attack last week by bringing up class-warfare issues that divide the haves and the have-nots.
Senate Majority Leader Harry Reid (D-Nev.) invited Obama to continue to find a meeting place on the debt ceiling this week. To date, no formal meeting has been set with Republican leaders.
Apparently, closed-door meetings are taking place but no one is disclosing any of the details. However, parties on both sides say one sticking point is the administrations plan to cap itemized deductions for families with adjusted gross incomes over $250,000 and up, not just those earning $1 million or more. Additionally, Democrats are seeking to eliminate a tax-accounting method employed by many U.S. businesses, including many small firms. Republicans have given no signal they will agree to these proposals.
President Obama has suggested other ways of reaching the $2 trillion figure that would be to cut the payments to Medicare and Medicaid providers. Instead, Republicans have called for structural changes to the programs, like increased eligibility ages and means testing for Medicare and giving states more control and authority over Medicaid dollars. This may prove tricky as the Obama administration is now challenging the authority of the states to shift dollars away from agencies like Planned Parenthood. The administration is also seeking a repeal on subsidies for the oil and gas industry as a way to meet both his debt ceiling and clean energy goals.
In remarks given to the Teamsters in Las Vegas on Friday, Vice President Joe Biden said, Ladies and gentlemen, we have fight, referring to how Republicans are opposing tax increases.
Sen. John Cornyn (R-Texas), in an interview on Fox News Sunday said, The last thing that employers need is further disincentives to not hire people, and thats what higher taxes would mean.