TOPICS > Economy

Debt Debate Heats Up in Washington as Borrowing Limit Looms

May 10, 2011 at 12:00 AM EDT
With the federal government set to hit its legal limit on borrowing in less than a week, House Speaker John Boehner outlined new debt ceiling negotiation terms. Kwame Holman reports on the politics of the debate.

JEFFREY BROWN: And we turn to the ongoing political battle over the nation’s budget deficit.

House Speaker John Boehner has now unveiled what he hopes for in a final deal on spending cuts.

NewsHour congressional correspondent Kwame Holman reports.

KWAME HOLMAN: The debt debate in Washington heated up again with the federal government set to hit its legal limit on borrowing in less than a week.

House Speaker John Boehner laid out his conditions for raising the so-called debt ceiling in a speech last night in New York.

REP. JOHN BOEHNER, R-Ohio: Let me be as clear as I can be. Without significant spending cuts and changes in the way we spend the American people’s money, there will be no increase in the debt limit. And the cuts should be greater than the accompanying increase in the debt limit that the president has given.

We’re not talking about billions here. We should be talking about cuts in trillions, if we’re serious about addressing America’s fiscal problems.

KWAME HOLMAN: The government is expected to hit the $14.3 trillion debt ceiling no later than May 16.

Treasury Secretary Timothy Geithner has said he can keep the country out of default until August 2 through a series of accounting maneuvers. But that gives lawmakers less than three months to broker a difficult deal.

Just how difficult was on full display today. President Obama and most Democrats favor tax increases as part of any deficit-reduction package.

But, on NBC this morning, Speaker Boehner said Republicans are willing to look at any ideas, except that one.

MATT LAUER, “The Today Show”: So, as you sit here today, raising taxes, that’s a nonstarter?

JOHN BOEHNER: It is off the table.

MATT LAUER: Off the table.

JOHN BOEHNER: Everything else is on the table.

KWAME HOLMAN: But among Democrats, Senate Majority Leader Harry Reid, sporting injuries from a recent fall, said it’s really unfair to rule out tax changes.

SEN. HARRY REID, D-Nev.: So we shouldn’t be drawing lines in the sand. We should be willing to work together. And that — the fair way to do that is to cut spending — we know we have to do that — but also to make the tax code a little more fair. And I think, rather than drawing lines in the sand, that’s where we should be.

KWAME HOLMAN: There also was new talk of entitlement reform. Boehner insisted reforming Medicare and Medicaid still are live options, despite rising criticism of Republican ideas.

JOHN BOEHNER: We know that these programs will not exist in the future if we don’t make changes to them, because they’re unaffordable for our kids and our grandkids.

KWAME HOLMAN: The Senate Republican leader, Mitch McConnell, joined in that stance.

SEN. MITCH MCCONNELL, R-Ky.: If the last financial crisis taught us anything, it’s that we can’t afford to play with fire when it comes to economic forces this great. We need to get serious now, before the crisis that we know is coming. And that means entitlement reform needs to be on the table.

KWAME HOLMAN: Democrats said if Republicans really are serious about saving money, there’s a much more immediate target: eliminating tax breaks for oil companies.

Majority Whip Dick Durbin of Illinois:

SEN. RICHARD DURBIN, D-Ill.: And for those members on both sides of the aisle who have given impassioned speeches about reducing the deficit, here’s your chance. It’s a put-up-or-shut-up moment. If you really believe in reducing the deficit, here’s $21 billion of low-hanging fruit. Let’s pick it. Let’s pick it for the taxpayers. Let’s take these savings and put it right on deficit reduction.

KWAME HOLMAN: The debate unfolded as Vice President Biden and a bipartisan group of House and Senate leaders held a second meeting today on a framework for deficit reduction. President Obama is scheduled to hold deficit talks with Senate Democrats at the White House tomorrow, followed by Senate Republicans on Thursday.