Is a Short-Term Debt Deal in the Works?

Posted on July 5, 2011. Filed under: Uncategorized | Tags: , , , , , , , , , , , , , |

While the White House is steadfastly denying that a short-term deal to raise the national debt-limit is being considered, the buzz on the Hill about a several month extension is growing louder.

According to Roll Call –“Democrats are considering a plan that would raise the debt ceiling to a level that would prevent the U.S. government from defaulting on its loans for seven months and, per Republicans’ demands, would include about $1 trillion in spending cuts.”

On the Sunday political talk shows both Senators John Cornyn (R-Texas) and John McCain (R-Arizona) indicated that they would entertain the idea of ending some subsidies and closing some tax loopholes as a way to increase revenues, a Democrat demand, in order to reach a deal. Cornyn even hinted he would consider a short-term deal to raise the debt ceiling.

Appearing on Fox News Sunday, Cornyn said that while a “mini-deal” is possible the “big problems aren’t going to go away…All it does is delay the moment of truth.” He said a long-term agreement is preferable, “but if we can’t (secure a long-term deal), then we’ll take the savings we can get now and we will relegate this as we get closer to the (2012) election.”

Likewise, as Republicans seem to be giving on increasing revenues, President Obama has offered up major cuts to the Medicare and Medicaid to secure a deal. The New York Times is reporting that the White House would be willing to make –“$340 billion in reductions to the social insurance programs over ten years” if the GOP swallow revenue increases.

“I’ve been willing to say we need to see where we can reduce the cost of health care spending and Medicare and Medicaid in the out-years, not by shifting costs to seniors, as some have proposed, but rather by actually reducing those costs,” said the President during a news conference last week.

Congress must raise the $14.3 trillion debt ceiling by August 2 to avoid a government default. The country is borrowing roughly $150 billion a month to pay its bills.


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