Debt Negotiations Update

Former President Bill Clinton said the he hopes Congress can make a “mini-deal.”
Debt Negotiations Update
Ivan Pentchoukov
7/5/2011
Updated:
7/5/2011

As the Aug. 2 deadline set by the Treasury is less than a month away, the only kind of a deal that Congress can strike on raising the debt ceiling will likely be a short-term one. Former President Bill Clinton said the he hopes Congress can make a “mini-deal,” in an interview at the Aspen Ideas Festival.

“I don’t think you can agree to some mega-deal on their terms. And so I think as they get closer I believe they will agree on a more modest package of cuts and the Republicans, if I were in their position, I would say this only counts for six months or eight months or whatever, but we don’t want to let the American people’s credit go under, let our credit get downgraded,” Clinton said, according to The Atlantic.

Given a Republican majority in the House, Clinton’s suggestion seems to be the only way out of the standoff. Additional pressure is on several Republican representatives as redistricting will pit them against each other in upcoming elections. In such a case, a vote for an increase of the debt ceiling could be damaging come election season.

Sen. John Cornyn argues that raising taxes on the job creators would negatively impact U.S. competitiveness on the world jobs market. In an interview with KRLD, a local Dallas radio station, Cornyn said that employers are more likely to create jobs oversees if faced with tax increases. Cornyn also echoed Clinton’s concern:

“I think that’s more likely than not at this point because we’re basically running out of time because the House has to pass it as well as the Senate and really we’re coming up against an Aug. 2 deadline; so it may be we'll get sort of a mini-deal as President Clinton said, but really we need to deal with the problem as a whole and that means not just kicking the can down the road, which is what a mini-deal would be,” he said.

President Barack Obama reiterated that the debt ceiling discussions are ultimately a jobs issue at a June 29 press conference. The president is pursuing a deal that would see investment in the economy as fuel for job creation and revenue growth. The president’s plan includes raising taxes on the rich as well lifting tax deductions from major oil and gas companies.

“I think it’s important to understand that deficit reduction, debt reduction, should be part of an overall package for job growth over the long term. It’s not the only part of it, but it’s an important part of it,” Obama said.

Republicans are meanwhile firm that no deal on a debt ceiling increase will pass if it includes tax hikes.

“A debt limit increase can only pass the House if it includes spending cuts larger than the debt limit increase; includes reforms to hold down spending in the future; and is free from tax hikes,” Speaker John Boehner said in a June 29 press statement.

Ivan is the national editor of The Epoch Times. He has reported for The Epoch Times on a variety of topics since 2011.
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