White House budget director Jack Lew optimistically said that he believed there was still time before the Aug. 2 deadline “to get something big done” on a grand deal that would raise America’s debt limit while reducing long-term federal budget deficits.
“I think that what is encouraging is that the leaders in Congress seem to have all agreed that we can’t push to a default,” said Lew. “So I think that there are many conversations going on in order to make sure that doesn’t happen.”
The government will exceed the current $14.3 trillion debt ceiling in 16 days. A failure by Congress to increase that cap — which past Congresses have done as a matter of course no matter which party was in control — will force a US default. The far-reaching consequences would likely produce higher interest rates for consumers on mortgages, car loans and credit cards. It also would make US government borrowing more expensive and could stop government checks from going out to elderly Social Security recipients. All of that holds the potential for turmoil in world financial markets and international economies.
Sunday’s talks among aides on both sides follow the failure of five straight days of talks at the White House between Obama and congressional leaders.
Obama wants to see major cuts in US spending, as do Republicans, but he wants to balance that with increased tax revenues that hit the wealthiest Americans and corporations. Republicans, especially those new Republican members of the House of Representatives elected last year on a pledge of smaller government and lower taxes, steadfastly refuse to budge on taxes.
Nevertheless, Lew said, “I think there’s still time to get something big done.”
Lew said on NBC televison’s “Meet The Press” that the president “made clear he wants the largest deal possible.”
“He wants to do the most we can to reduce the deficit,” Lew said. “But he also said that if we can’t get the most done, then in addition to extending the debt we should do as much as we can.”
House Republicans are preparing to vote this week on allowing an increase in the government’s borrowing limit through 2012 as long as Congress approves a balanced-budget constitutional amendment.
But it is extremely unlikely that such an amendment could gain approval. An amendment requires a two-thirds majority vote in both the House of Representatives and the Senate, and then must be ratified by three-fourths of the 50 states — a lengthy process.
Republican Sen. Jim DeMint, a favorite of the small government, anti-tax tea party movement, said the House position was proof Republicans want to compromise and “hardly a radical idea.” But the Senate’s No. 2 Democrat, Dick Durbin, said that bill with a balanced-budget amendment doesn’t have the needed support in the Senate.
“This notion that we have to change the Constitution to do what we were elected to do is just plain wrong,” Durbin said. Both senators spoke on “Meet the Press.”
Lew, who also appeared on CNN’s “State of the Union,” also did not like the idea.
“What these ideas do is say let’s kick the can down the road so that others will deal with it,” he said. “The challenge is for Washington now to do the job the American people sent us here to do.”
DeMint said the United States is on course for a financial disaster and that lawmakers have “to draw a line in the sand now because a day of reckoning is going to come.”
“And the longer we put it off the bigger the problems are going to be for our country,” DeMint said.
However, if it comes down to it, White House officials who say Congress won’t let the United States default are “probably right on that,” DeMint said.
Senate leaders are working on a fallback bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit reduction in the proposal in hopes of satisfying House Republicans.
“Lines of communication remain open with all parties,” said Brendan Buck, a spokesman for House Speaker John Boehner.
