The Treasury Department deadline is less than three weeks away, but politicians on Capitol Hill seem no closer to striking a budget deal than they were three weeks ago.
Over the weekend, Speaker of the House John Boehner maintained that his party could not agree to President Barack Obama’s $4 trillion spending cut deal over the next 10 years, insisting that his party would refuse any tax increases given the weak state of the economic recovery.
On Tuesday, in an interview with CBS, President Obama stated that he could not guarantee that Social Security checks could be paid out to recipients if the debt ceiling is not lifted by the looming Aug. 2 deadline.
“I cannot guarantee that those checks go out on Aug. 3 if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” said the president.
In the House, a bill co-sponsored by Reps. Michelle Bachmann (R-Minn.) and Peter King (R-Iowa) was introduced to prioritize government spending in case the debt limit is not lifted by the quickly approaching August deadline. The bill would force the U.S. Treasury to pay the interest on bonds and military personnel ahead of any other Treasury obligations.
One major development that did occur this week was the unveiling of Senate Minority Leader Mitch McConnell’s “last-choice” plan for avoiding a default on the U.S.’s sovereign debt by Aug. 2, if a budget deal to raise the debt limit is not reached first. The plan would avoid both the painful choice of either defaulting on the sovereign debt, and that of prioritizing spending if the debt limit is reached but the government wants to avoid a default.
Instead of allowing the Treasury to default on its debt or forcing it to prioritize spending, McConnell’s plan would allow President Obama to raise the debt limit by as much as $2.5 trillion for the remainder of his term on three separate occasions. For each of the three installments, the president would be required to submit a proposal to Congress for spending cuts equal in amount to the increase. Congress would be given the chance to pass a resolution of disapproval within 15 days, but the president would also be able to veto the plan, provided that a minority of members in either chamber of Congress—one-third plus one member—upheld the veto.
McConnell’s plan was lauded by many congressional Democrats, but was met by the White House with lukewarm caution.
“We appreciate the fact that Sen. McConnell’s proposal is effectively an acknowledgment of what we have said all along that there is no alternative to the United States honoring its obligations. … This is not a preferred option,” said White House Press Secretary Jay Carney on Wednesday in a White House Press briefing with reporters. “The president is firmly committed to significant cuts in spending and to dealing with our deficit and debt problems in a balanced way.”
Also on Wednesday, Speaker Boehner announced his support for a balanced-budget amendment, and stated that Congress would take up a balanced-budget amendment next week.
“Adoption of the Balanced Budget Amendment would help ensure such spending restraints are set in stone, and the certainty it provides will help create a better environment for job creation across the country,” said Boehner in a statement released by his press office. “Implementing long-term reforms, like the Balanced Budget Amendment, will make sure we never again face a debt crisis like we do today.”
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