Accept expense reductions, boot taxes to 2013
Expense and Revenue
There are two dimensions to America’s debt problem: 1) expenses are too high and 2) revenues are too short. Republicans will address the spending problem now and so have Democrats. Accept a deal to reduce expenses and raise the debt limit as that will stabilize the U.S. economy for the moment. I mean “moment.”
There is a revenue shortfall that as created when Republican President Bush initiated a tax reduction and simultaneously launched war in Iraq. Combine that with the housing, banking, and Wall Street calamities and we have a revenue shortfall. Revenue shortfalls must be made up. You can postpone it but you cannot avoid it.
The Bush tax reduction on wealthy Americans was a bonus for them that American could not afford, not then and not now.
Obama can address that in the next term.
“Budget Impasse Hardens Despite Senate Decision to Cancel Recess
Published July 01, 2011
The Senate has penciled in extra time to work out a budget deal ahead of an Aug. 2 deadline, but rather than move toward the middle both sides are digging in hard on their conditions for deficit reduction.
The tension threatens to keep offline negotiations that fell apart last week when Republican negotiators walked out. GOP lawmakers want major spending cuts as part of any agreement to raise the debt ceiling -- something the Obama administration says must happen by the August deadline to avoid the risk of default -- and left the talks out of concern that Democrats were pushing too hard for tax hikes.
But while Democrats say they're willing to accept some spending cuts, President Obama made clear during his press conference Wednesday that he will continue to push for tax increases as part of a deal.
The Senate acceded to one presidential demand Thursday -- the chamber canceled its July Fourth recess and prepared to come back into session starting Tuesday, after Obama complained that Congress was not working as hard as he was.
But there was no indication the two sides had progressed in resolving their chief disagreement.
Not only was Obama heading to Philadelphia Thursday to attend Democratic fundraising events, White House Press Secretary Jay Carney dismissed McConnell's invitation, saying he had merely "invited the president to hear what would not pass. That's not a conversation worth having."
Later, at a donor's home, Obama reiterated his call for spending cuts and new tax revenues.
"The truth is you could figure out on the back of a napkin how to get this thing done," he said. "The question is one of political will."
Lawmakers might not even have as much time to reach a deal as the administration lets on. One Democratic official with knowledge of the debt talks says a deal is needed in the next two to three weeks to allow time for procedural hurdles.
"If the markets start to react, then we've waited a day too long," the official told Fox News, noting that the GOP-led House has a three-day rule for passing bills.
This official said a deal is needed by July 22, nearly two weeks earlier than the Treasury deadline, though some on Capitol Hill have called the Treasury's date a scare tactic to push a deal.
Treasury Secretary Tim Geithner has extended the deadline three times in the past.
The stakes of the debate were underscored when a Standard & Poor's executive said the credit-rating agency would give the government its lowest rating should lawmakers fail to agree on raising the borrowing limit and cause a federal default.
Should that occur, S&P would drop the U.S. rating of AAA to D, John Chambers, managing director of sovereign ratings for the company, said on Bloomberg Television.
Obama has said that in talks, Republican and Democratic negotiators have found more than $1 trillion in potential spending cuts over the coming decade, including reductions favored by both sides.
The White House is also proposing about $400 billion in higher tax revenues. Republicans want no tax increases and deeper spending cuts than Democrats have proposed.
Increasing the current borrowing limit by about $2.4 trillion would carry the government until the end of 2012 -- thereby avoiding another congressional vote on the issue until after the next presidential and congressional elections. Republicans have insisted on coupling any extension with at least an equal amount of budget savings.
The Associated Press contributed to this report.