Deficit Talks Still Topic A in Washington

Deficit Talks Still Topic A in Washington

Space aficionados may have their attention focused on Kennedy Space Center and whether the shuttle will launch today, but back in Washington, raising the debt limit still dominates the news.

For a brief moment yesterday, hopes were raised that a deal might be struck by the end of this weekend. The President changed the game by proposing that everyone think bigger, trying to cut the deficit by $4 trillion over 10 years instead of $2 trillion. In that case, he said, everything would be on the table, including cuts to Medicare and Social Security. For his part, House Speaker John Boehner (R-OH) reportedly agreed that under those circumstances, revenue increases also could be considered. Boehner was widely quoted as saying that there might be as good as a 50-50 chance agreement could be reached this weekend.

According to media reports, the two men met secretly on Sunday and those discussions laid the groundwork for yesterday’s proposal at a White House meeting among the President and House and Senate Republican and Democratic leaders.

The problem was that the President apparently had not consulted in advance with top Democrats in Congress about the potential of cutting Medicare and Social Security. Democrats traditionally are protectors of those programs. The National Journal (subscription required) quoted Rep. James McGovern (D-Mass) as saying of the President that “I thought he was still a Democrat.”

Senate Republicans were not thrilled either to learn that revenue increases were now being put on the table by one of their own party members.

For his part, the President said: “Everybody acknowledged that we have to get this done before the hard deadline of August 2nd to make sure that America does not default for the first time on its obligations. And everybody acknowledged that there’s going to be pain involved politically on all sides.”

He announced that White House and congressional staff will work through the weekend and he and the congressional leadership will reconvene on Sunday. What will be decided is anyone’s guess. For the space program, it is not likely to be good news.

The meetings are to resolve differences between the parties so that Congress will agree to raise the debt limit. The United States Government surpassed the $14.3 trillion limit in May and remains solvent because the Treasury Department is not contributing what it should to federal government employee retirement accounts. It promises to repay those accounts once this situation is resolved. August 2 is the most recent date the Administration has set for when Congress must raise the limit to avoid a government default. Secretary of the Treasury Timothy Geithner uses words like “catastrophic” to describe the effect of a default.

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