According to Republican leaders in Congress, President Barack Obama is “really not serious” about reining in America’s record $1.6 trillion deficit. The accusations come while the legislature is preparing to vote to raise the federal debt ceiling which limits the amount of money that the federal government can borrow.
Administration officials and Democrats have warned that letting the nation default on its debt obligations could trigger another financial meltdown yet several fiscally conservative freshmen members of Congress will vote against the measure to protest runaway federal spending. Others intend to use the vote as leverage to extract further spending reductions from the president and his party.
Speaking in New York City this week, House speaker John Boehner demanded trillions in deficit reduction if his party is to extend the government’s borrowing authority. In an interview broadcast on CBS’ Face the Nation Sunday, he accused the president of failing to take “real action” on the deficit, arguing that there could be no more “kicking the can down the road.”
The administration expects to raise the debt limit from $14.3 trillion by some $2 trillion which would postpone the next likely vote until after the 2012 presidential election.
Wisconsin congressman Paul Ryan, who designed the opposition’s alternative fiscal plan which balances the budget by the end of this decade, suggested that for every dollar the debt ceiling is raised, a dollar should be cut in spending. He noted on CNN’s State of the Union that only Republicans had come up with plans to tackle the problem. “We have yet to see counteroffers from the other side,” he said. Boehner agreed that Democrats should “put a plan on the table.”
The president said to champion a “balanced” fiscal approach last month but volunteered few specifics on how to cut trillions in future budget growth except to suggest that health-care spending for the elderly should be rationed and taxes on the wealthy raised.
During a CBS town hall event this week, President Obama agreed that $1 trillion in spending could be cut but he argued that an equal amount should be raised in additional revenue, “because I think the concept of shared sacrifice is something that most Americans believe in,” he said.
Republicans reject tax hikes altogether. Their plan actually lowers corporate and top income tax rates to stir investment and job creation. “The top 1 percent of wage earners in the United States pay 40 percent of the income tax,” Speaker Boehner explained. “The people he’s talking about taxing are the very people that we expect to reinvest in our economy and to create jobs.”
Despite the vast ideological differences, the debt ceiling vote, according to Senate Minority Leader Mitch McConnell, is a “great opportunity” to address the nation’s fiscal predicament.
He proposed a “spending ceiling for the next two years” because the two parties are unlikely to agree on a budget and entitlement reforms in the long run. Public pension and health support programs are the main drivers of budget growth. Unless significant reductions in their scope are enacted, America will face an entitlement crisis soon. It is why McConnell urged his fellow legislators to get their act together. “We need to impress the markets,” he told CNN, referring to a recent warning from Standard and Poor’s about America’s deteriorating creditworthiness. “Now is the time to deal with the fiscal problems we have,” according to Boehner.