Obama and Republicans Discuss Debt Ceiling
The Democrats demanded higher taxes for the wealthy in opposition of the Republicans in order to close the debt as a whole.
The stagnant disagreements have digressed the Republicans back to square one in which they must concoct an idea to raise the debt ceiling.
Except this time they are closer to a government default on its debts.
Obama and congressional leaders are to try again this afternoon to establish a resolution at the White House after Obama held a news conference for his case regarding a “balanced plan” pertaining to budget cuts and terminating specific tax cuts and loopholes.
Obama has intentions of launching plans that will cut the debt by $4 trillion over the next four years.
Treasury Secretary Timothy Geithner appeared on the Sunday shows in order bring notice to the fact that the federal government will have difficulties paying off its dues after August 2nd without a debt ceiling increase.
“The longer we go into July, the more risk there will be in financial markets, more concern there is that America cannot get its act together to figure out how to solve this problem,” Geithner said on NBC’sMeet The Press. ”And you’ll see that reflected in higher interest rates and more concerned loss of confidence.”
He proceeded to elaborate:
“Let me explain what happens on August 2nd. On August 2nd, at that point, we run out of the ability to borrow to meet our obligations. Remember, we have to borrow now 40 cents for every dollar we spend.”
“Now, on August 2nd, if Congress hasn’t acted, we’re left with the cash we have and the cash we’re going to take in. And every week, starting the week of August 2nd, we have to go out and finance roughly $100 billion in maturing obligations of the government.”
“We make 80 million checks a month to Americans, 55 million people on Social Security benefits and millions more Americans of veteran’s benefits, Medicare/Medicaid, people who supply our troops in combat, 80 million checks a month.”
“So, on August 2nd, we’re left with cash on hand and the cash we take in. And we have to convince people to come and refinance $500 billion in maturing principal payments that come due in August.”
The Republicans have agreed to raise the debt ceiling only under the condition of specific budget cuts. They refuse to increase taxes with claims that it would damage job growth.
House Speaker John Boehner told Obama that he refused to support a $4 trillion package that includes higher taxes. He suggested reverting to a smaller roughly $2 trillion cut that had originally been proposed during meetings hosted by Vice President Biden.
Prior to last night’s White House meeting, Boehner delivered the following statement:
“The Speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward.
The Speaker restated the fundamental principles that must be met for any increase in the debt limit: spending cuts and reforms that are greater than the amount of the increase, restraints on future spending, and no tax hikes.
The President agreed with the Speaker that their previous talks did not produce any agreement. The group agreed to continue talks in the coming week.”