Fiscal policymakers remained deadlocked this week in their quest to find a way out of a debt dilemma that has the government sliding toward an unprecedented default on its financial obligations.
President Obama: “The problem we have now is we're in the 11th hour and we don't have a lot more time left.”
President Obama summoned House Speaker John Boehner to the White House Wednesday seeking a compromise on the issue that virtually everyone agrees is replete with significant economic -- and political -- ramifications. Despite 90-minutes of dialogue the session failed to yield any kind of resolution.
Rep. John Boehner, R-Ohio Speaker of the House: “The ball continues to be in the president's court. And it's been there for some time. If we're going to avoid default and prevent a downgrade of our credit rating, and if we're going to create jobs and jump-start the economy, I think he needs to step up and work with us on the spending cuts and reforms that the American people are demanding.”
The meeting took place a day after the Republican-controlled House approved legislation increasing the government's borrowing authority by $2.4 trillion. The, so called, "Cut, Cap and Balance" measure would cut spending by $111 billion in 2012, cap spending over the next decade and prohibit more borrowing until Congress approves a balanced-budget amendment to the Constitution.
Sen. Harry Reid, D-Nev. Majority Leader: "Republicans so-called Cut, Cap and Balance plan doesn't have one chance in a million of passing the Senate."
"Cut, Cap and Balance" then moved to the Senate, where its demise is all but certain. Democrats, adamantly oppose the measure - which they say would result in debilitating cuts to Medicare.
Instead, a bipartisan group of Senators, dubbed the "Gang of Six," announced their plan to cut the deficit by nearly $4 trillion over the next decade. The savings would be achieved through cuts to discretionary spending, including defense programs, reforms to federal health care programs including Medicare and Medicaid and 1.2 trillion in new tax revenues.
President Obama: “The framework that they put forward is broadly consistent with what we've been working on here in the White House and with the presentations that I have made to the leadership when they have come over here.“
The "Gang of Six" proposal includes an immediate 10-year, $500 billion down payment achieved Congress setting caps on individual agency budgets it approves each year. It also requires an additional $500 billion in cost curbs on federal health care programs, cuts to federal employee pensions, curbs in the growth of military health care and retirement costs, and cuts to farm subsidies.
Critics claim the plan say it contains larger tax increases than the Gang of Six is letting on. Criticism aside, it's becoming increasingly clear the plan is emerging too late and it's too controversial to win Congressional approval before the August 2nd deadline.
And with time running out, White House Press Secretary Jay Carney announced the president had softened his previous stance and might support a stop-gap measure averting financial default -- but only if it paved the way to a comprehensive measure reducing the national debt.
Jay Carney, White House Press Secretary: "What we mean by that is we would not support a short-term extension absent an agreement to a larger deal. That's not acceptable.”