Obama Urges Compromise Over Dangerous Debt Limit Stalemate

President Barack Obama used a nationally televised address on Monday night to increase pressure on the U.S. Congress for a solution to the nation's debt limit and deficit crisis.  With an August 2 deadline looming to raise the government's borrowing limit, Mr. Obama urged Americans to pressure lawmakers for a compromise.


After several weeks of tense meetings at the White House and on Capitol Hill, walkouts by Republicans, and warnings by credit rating agencies, Mr. Obama used his speech delivered from the White House East Room to ratchet up the pressure.


Earlier, Senate Majority Leader Democrat Harry Reid proposed a $2.7 trillion spending cut plan, with no cuts to Social Security and Medicare programs, a debt ceiling increase through next year's presidential and congressional elections, with a bipartisan committee recommending further cuts.


House of Representatives Speaker, Republican John Boehner's two-stage plan envisions $1.2 trillion in spending cuts, an immediate $1 trillion debt limit increase and another possible increase next year tied to conditions.  Boehner's proposal would also create a bipartisan committee and have lawmakers vote on a constitutional amendment for balanced budgets.


President Obama said Boehner's plan is part of a "dangerous game" that would result in repeating the same debate six months from now.


"This is no way to run the greatest country on Earth.  It is a dangerous game that we have never played before and we can't afford to play it now, not when the jobs and livelihoods of so many families are at stake.  We can't allow the American people to become collateral damage to Washington's political warfare.," he said.
Earlier, Senator Reid said Republicans appeared determined to embarrass the president and force a showdown over the debt limit issue.  He and fellow Democrat Charles Schumer said Boehner's hand was being forced by lawmakers closely linked to the conservative and libertarian Tea Party movement.
Senator Reid said "We should not let these extremists dictate the outcome of this debate or the direction of this country."
Schumer said "There are 100 people in the House who don't care if we default, any of them, who are extreme and ideological and who have not seen the House Republican leadership responsibly resist that."


In his own televised address after Mr. Obama's speech, Speaker Boehner said the president had engaged in a "massive spending binge" after which he requested a historic increase in the national debt.


"The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today.  This is just not going to happen," he said.


Boehner says he expects the proposal he unveiled on Monday to pass in the House, and he predicted approval in the Democratic-controlled Senate, adding that if Mr. Obama signs it into law, the crisis atmosphere he accused the president of having created would disappear. 


In his address, President Obama did not issue a specific threat to veto the Boehner plan.  He said he wants congressional leaders to come up with a fair compromise in the next few days that can pass the House and Senate, and that he can sign.  He said Americans are "fed up" with Washington, "where compromise is a dirty word."


"The American people may have voted for a divided government, but they did not vote for a dysfunctional  government" Obama said.  "So I am asking you all to make your voice heard.  If you want a balanced approach to reducing the deficit, let your member of Congress know.  If you believe we can solve this problem through compromise, send that message."


While the president endorsed Senator Reid's proposal, he repeated that a long-term solution to the nation's fiscal woes needs to include savings in costly entitlement programs such as Social Security and Medicare to enable them to survive.


In the Senate, the Reid plan might be blocked by Republican procedural tactics, and it is unclear whether Speaker Boehner can get the votes to pass his plan, despite a strong Republican majority in the House.


Saying that default would be "a reckless and irresponsible outcome" to the debate, Mr. Obama said he is confident that compromise can be reached and that enough lawmakers from both major political parties will ultimately put politics aside.


U.S. and global markets around the world are waiting anxiously for the White House and Congress to come up with a solution to America's debt limit crisis.  Although financial markets have not suffered major losses, economists warn of serious repercussions from a rise in interest rates that would likely follow a U.S. default, with some saying there already has been significant damage to America's credit worthiness. VOANews

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IMF Urges Swift Action on US Debt Dispute

As U.S. lawmakers and President Barack Obama haggle over plans to cut Washington's massive debt, the International Monetary Fund says the United States must take urgent and effective action on the issue. 


Monday, the newest IMF report on the U.S. economy said it is critical to the U.S. and other economies for Washington to promptly raise the legal limit on debt, while gradually cutting spending.


Leaders of the U.S. Senate and House of Representatives are working on competing plans to raise the federal debt limit and trim budget deficits. Congress and the White House failed to reach a bipartisan agreement Sunday, prompting declines on many stock markets Monday.   Gold prices also hit a record high. 


The leader of the majority party in the House, John Boehner, called on his fellow Republicans to support a short-term extension of the debt ceiling accompanied by a package of spending cuts.  Boehner earlier said he was not sure a bipartisan deal could be reached.


Senate Majority Leader Harry Reid, a Democrat, wants a longer-term deal on the debt ceiling, while also cutting trillions of dollars in spending. President Barack Obama has said he wants an ambitious debt-reduction package.


August 2 is the deadline for raising the debt ceiling and allowing the federal government to continue to borrow money.  The Obama administration and congressional leaders had hoped to announce a framework for an agreement before Asian financial markets opened Monday.VOANews

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Obama, Republicans Still Wrangling Over Debt Solution

U.S. President Barack Obama and opposition Republicans have called on each other to offer "serious" plans to solve the nation's financial problems.

The two sides appear far from agreement, and face an August 2 deadline to raise the $14.3-trillion legal limit on the amount of money Washington can legally borrow.

During his weekly address on Saturday, Obama challenged Congress to share what he called his willingness to compromise in solving the debt problem.  He said any solution should be a shared sacrifice.

Earlier, Obama said he is willing to consider cuts in popular social programs, including pensions and health care for the elderly, and aid to veterans.  In return, the president wants Republicans to vote for higher taxes on wealthy Americans and large corporations.

In the Republican weekly address, Senator Orrin Hatch of Utah rejected the president's suggestion of a tax increase and blamed Democrats for the financial mess.  Senator Hatch also advocated a Balanced Budget Amendment to the Constitution as the only long-term solution to restraining government spending.

Speaker of the House of Representatives, Republican John Boehner, said Friday the House will vote next week on a $2.4-trillion measure to raise the debt ceiling.  The Republican-sponsored measure is intended to cut spending, cap expenditures and seek to amend the constitution to require balanced budgets.

President Obama said getting such major cuts without new revenue will require unacceptably deep cuts in programs that are vital to many Americans.  He also said elected officials do not need a constitutional amendment to make the tough spending decisions that are a key part of their jobs.

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Competing US Deficit Reduction Proposals Debated

The battle engulfing Washington over America's runaway national debt is exposing deep philosophical differences between Democrats and Republicans on the proper role of government, the sacrifices required to improve the nation's dire fiscal outlook, and on whom the burden of those sacrifices should fall. Illustrating the partisan divide are two legislative proposals, one Republican, the other Democratic, that seek to shave trillions of dollars in future U.S. indebtedness, but do so in very different ways. 

Four trillion dollars over 10 years, that is the amount of deficit reduction sought in two competing budget blueprints.

Under House Budget Committee Chairman Paul Ryan’s plan, passed by the Republican-controlled chamber in April, federal spending would be slashed by $6.2 trillion. The plan would also lower tax rates paid by corporations and top earners, bringing projected savings down to the $4 trillion range.

Monday, Senate Budget Committee Chairman Kent Conrad unveiled a Democratic alternative that seeks the same deficit reduction through an even mix of spending cuts and increased tax revenue.

First, a closer look at the Ryan budget. It proposes deep cuts in non-defense spending. For example, federal expenditures to protect the environment would be slashed from $40 billion this year to $26 billion in 2021, with no adjustment for inflation. Energy-related expenditures would go from $20 billion to $1 billion. The plan eliminates or consolidates hundreds of federal programs Chairman Ryan deems antiquated or duplicative.

The Ryan budget also seeks savings in the Medicare program that pays a portion of retirees’ health care bills by transforming it into a limited federal subsidy for private health insurance. It would also repeal President Barack Obama’s signature health care reform law.

Without the new tax cuts in the Republican plan, the deficit reduction would be far greater or, alternatively, the spending cuts needed to reach $4 trillion would be less severe. But Congressman Ryan makes no apologies for including them in his plan. “If you tax something less, you get more of it. We do not want to tax jobs more. We do not want to tax investment more. We do not want to tax small businesses and entrepreneurs more. We want them to be taxed less so that we get more of them: more jobs, more growth," he said.

Senator Conrad’s blueprint arrives at a similar bottom line by different means. The Democratic proposal, which has yet to be voted on, would end tax breaks for favored corporate sectors and boost income taxes on families earning more than $1 million a year. Taxes on large estates and investment profits would rise.

The plan leaves Medicare and other so-called entitlement programs largely untouched. Instead, it would cut nearly $900 billion in defense spending and more than $300 billion from non-defense expenditures over 10 years. The Conrad proposal assumes lower projected interest payments from a reduction in the growth of America’s national debt.

Senator Conrad says a balanced approach of spending cuts and tax increases is required to put America’s fiscal house in order. “Spending is the highest is has been as a share of GDP [gross domestic product] in 60 years. Yes, we have a spending problem. But it is not exclusively a spending problem. Because revenue as a share of GDP is the lowest it has been in 60 years," he said.

Republicans blasted the Conrad plan as a ploy to force U.S. taxpayers to foot the bill for out-of-control spending by an ever-expanding federal government. Senate Minority Leader Mitch McConnell said, “We are not going to further enable that model of government by shaking down the American people for more money at a time when they can least afford it.”

For their part, Democrats accuse Republicans of shielding the wealthy from sacrifice so that the burden of deficit reduction falls soley on the middle class and the poor. New York Democratic  Senator Charles Schumer said, “A budget agreement cannot be considered bold or comprehensive unless it asks millionaires, billionaires and wealthy corporations to contribute to deficit reduction. They do not have to do the whole thing, but they have got to do their share.”

Neither the Ryan nor the Conrad plans are likely to become law. But analysts see the proposals as useful tools in the broader budget debate. Maya McGuineas heads the non-partisan Committee for a Responsible Federal Budget. “The Paul Ryan plan is much more conservative and it focuses all on spending cuts. The Conrad plan is much more progressive and very tax-heavy. And so now you have the two bookmarks or ending points on the [political] spectrum. And hopefully now we can move more towards how you compromise between those two kinds of plans," she said.

Compromise remains elusive, as successive meetings between President Obama and congressional leaders have demonstrated.
*VOANews

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