No movement: Lawmakers dig in heels on debt crisis

Jan 6, 3:58 PM EST — WASHINGTON (AP) — Con­gres­sional lead­ers on Sun­day showed no signs of emerg­ing from their cor­ners to resolve the next step in the finan­cial cri­sis, with Democ­rats still talk­ing about higher taxes on the wealthy and the Senate’s top Repub­li­can sug­gest­ing that a crip­pling default on U.S. loans was pos­si­ble unless there were sig­nif­i­cant cuts in gov­ern­ment spending.

“It’s a shame we have to use what­ever lever­age we have in Con­gress to get the pres­i­dent to deal with the biggest prob­lem con­fronting our future, and that’s our exces­sive spend­ing,” said Sen. Mitch McConnell, R-Ky.

Last week’s deal to avert the com­bi­na­tion of end-of-year tax increases and spend­ing cuts known as the “fis­cal cliff” held income tax rates steady for 99 per­cent of Amer­i­cans but left some other major pieces of busi­ness unresolved.

By late Feb­ru­ary or early March, the Trea­sury Depart­ment will run out of options to cover the nation’s debts and could begin default­ing on gov­ern­ment loans unless Con­gress raises the legal bor­row­ing limit, or debt ceil­ing. Econ­o­mists warn that a default could trig­ger a global recession.

Also loom­ing are deep auto­matic spend­ing cuts expected to take effect at the begin­ning of March that could fur­ther erase frag­ile gains in the U.S. econ­omy. Then on March 27, the tem­po­rary mea­sure that funds gov­ern­ment activ­i­ties expires, and con­gres­sional approval will be needed to keep the gov­ern­ment run­ning. It’s one more chance to fight over spending

Law­mak­ers said debt talks will con­sume Con­gress in the com­ing weeks, likely delay­ing any con­sid­er­a­tion of an expected White House pro­posal on gun restric­tions in the wake of the Con­necti­cut school shooting.

Repub­li­cans say they are will­ing to raise the debt ceil­ing but insist any increase must be paired with sig­nif­i­cant sav­ings from Medicare, Med­ic­aid and other gov­ern­ment ben­e­fit pro­grams. Pres­i­dent Barack Obama has said he’s will­ing to con­sider spend­ing cuts sep­a­rately but won’t bar­gain over the government’s bor­row­ing authority.

“One thing I will not com­pro­mise over is whether or not Con­gress should pay the tab for a bill they’ve already racked up,” Obama said in his weekly radio and Inter­net address.

Democ­rats said fur­ther tax increases for the wealth­i­est Amer­i­cans were still pos­si­ble as Con­gress looks to close the gap between rev­enues and expen­di­tures. Democ­rats point out that Obama has already agreed to sig­nif­i­cant spend­ing cuts, and that the lat­est deal only gets the nation to about half of the rev­enue it needs to resolve the red ink.

“Trust me, there are plenty of things within that tax code — these loop­holes where peo­ple can park their money in some island off­shore and not pay taxes. These are things that need to be closed. We can do that and use the money to reduce the deficit,” said Illi­nois Sen. Dick Durbin, the second-ranking Sen­ate Democrat.

House Demo­c­ra­tic leader Nancy Pelosi of Cal­i­for­nia said she, too, wants to put “every­thing on the table from the stand­point of clos­ing loopholes.”

But McConnell bluntly declared that the “tax issue is over” after last week’s agreement.

“We don’t have this prob­lem because we tax too lit­tle; we have it because we spend too much,” McConnell said.

Mak­ing the rounds on the Sun­day talk shows, McConnell was asked repeat­edly whether Repub­li­cans were pre­pared to see the nation default on its spend­ing oblig­a­tions. McConnell said that wouldn’t be nec­es­sary, so long as Obama agrees to the spend­ing cuts.

But at one point, when asked by NBC’s David Gre­gory whether the GOP strat­egy will be to hold the debt ceil­ing “ran­som” in exchange for spend­ing cuts, McConnell said it was a “shame we have to use what­ever lever­age we have” to get the president’s attention.

“None of us like using sit­u­a­tions like the sequester (auto­matic across-the-board spend­ing cuts) or the debt ceil­ing or the oper­a­tion of gov­ern­ment to try to engage the pres­i­dent to deal with this,” McConnell said.

Sen. Lind­say Gra­ham, R-S.C., didn’t dis­miss the idea of allow­ing a par­tial shut­down of gov­ern­ment until an agree­ment can be reached. Texas Sen. John Cornyn and other Repub­li­cans have floated the idea of a shut­down as a way of win­ning deeper spend­ing cuts.

“I believe we need to raise the debt ceil­ing, but if we don’t raise it with­out a plan to get out of debt, all of us should be fired,” Gra­ham said.

Mary­land Rep. Chris Van Hollen, the top Demo­c­rat on the House Bud­get Com­mit­tee, said the Repub­li­can strat­egy amounted to: “Give us what we want … or we’re going to tank the United States economy.”

Pelosi said she believes the pres­i­dent has enough author­ity under the 14th Amend­ment to raise the debt ceil­ing with­out Con­gress’ bless­ing. But the White House has said pre­vi­ously that it does not believe that the amend­ment — which says the “valid­ity” of pub­lic debt shouldn’t be ques­tioned — gives the pres­i­dent that power.

McConnell spoke on NBC’s “Meet the Press,” ABC “This Week” and CBS “Face the Nation.” Pelosi was on CBS. Durbin and Gra­ham appeared on CNN’s “State of the Union” and Van Hollen was inter­viewed on “Fox News Sunday.”

Posted by Randa Wagner on Jan 6 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.