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Explaining the Latest on the Debt-Ceiling Drama

It's been two months since the federal government technically hit its $14.3-trillion debt limit, but there's still no agreement on a deal even as the deadline draws near. Here's a rundown of what's happened recently and what’s being discussed at the negotiating table right now. (For the basics of the debate, check our earlier explainer.)

Initially, the White House and some Democrats had pushed for a “clean” vote—that is, a vote on raising the debt ceiling that didn't tie in other measures or conditions. They’ve given that up. In late May, 82 House Democrats joined their Republican colleagues in rejecting a clean vote to raise the ceiling.

With the clean vote ruled out, negotiations over the debt ceiling and reducing the deficit have gotten messy. The Treasury Department has said it will need the debt ceiling raised by more than $2 trillion to get through the 2012 elections.

That figure is essentially being used now as the baseline for the spending cuts being discussed by lawmakers pushing their various demands. (Rep. Michele Bachmann, a Republican presidential contender, has continued to insist that she’ll vote for a debt ceiling increase only if it’s tied to a repeal of the health care overhaul.)

However complex the current debate may sound, at heart it is a very simple concept: A deficit can be tackled in only two ways—by spending less or by taking in more revenue.

President Obama has pushed for both, in the form of a more ambitious, long-term agreement that would reduce the deficit by $4 trillion over 10 years. He’s reportedly offered to raise the eligibility age for Medicare in order to win some concessions from Republican negotiators, who’ve opposed any deal that would include tax increases.

So far, that hasn’t seemed to sway them. Rep. Eric Cantor, a Virginia Republican and House Majority leader, has held a hard line on rejecting tax increases: “We don’t accept that you raise taxes in an economy like this,” he said recently. In June, negotiations led by Vice President Joe Biden fell apart after Cantor walked out.

But as Time magazine notes, Cantor hasn’t always attached so many demands to raising the debt ceiling. He voted in favor of it repeatedly during the Bush presidency without any insistence on spending cuts, and he wasn’t alone. In fact, Rep. Cantor and Speaker of the House Rep. John Boehner voted to raise the debt ceiling five times—by more than $3.7 trillion in all—during the Bush presidency, according to the liberal outlet Think Progress.

But politics on the issue cuts both ways. As we noted, then-Sen. Obama voted in 2006 against raising the debt limit. A White House spokesman has said the president now “thinks it was a mistake” to vote against the measure.

Meanwhile, the deadline looms just three weeks away. The Treasury Department said in May that creative maneuvering can only avert a default until August 2—at which point the United States will begin to default on some of its debts, potentially lowering the nation's credit rating and making borrowing more expensive in the long run. President Obama has said he won’t accept a short-term deal to put off the debate by 30 to 90 days. 

Though a full default has never happened before, the Washington Post notes that late payments of U.S. debts back in 1979 resulted in increased interest rates and even some investor lawsuits filed against the government.

Still, a handful of Republican lawmakers believe that fears of a default are greatly exaggerated. Dubbed the “default deniers,” some have accused the administration of using scare tactics over the debt ceiling.

This is way too erudite…the repubs will not understand..They need to listen to Rev Sharpton and the bagger from Georgia…Al called them out for their stupidity when NO ONE ELSE HAS!

We need more pundits to interrupt and push the repub-baggers on thier BS and lies!

JoAnn Dobrovic

July 12, 2011, 2:26 p.m.

Republicans generally want to see President Obama fail as Mcconnell said was his main objective, not thinking of whAt is in the best interest of our country.  Please wake up America and see this party for what it is before it is to late.

Cantor and McConnell are totally oblivious of what is right and just and doesn’t have a clue on how to effectively lead.  Cantor voted to raise the debt ceiling by 3.7 trillion during the Bush years.  We accept that new revenues are mandatory as we can’t possibly reduce the deficit with cuts alone.  Obama has a willingness to cut but has asked Repubs to meet him by asking for just a quarter revenue to three quarter cuts in the programs which are important to the Democrats.
Compromise is in the best interest of our country but the Repubs don’t know the meaning of the word.  I’m beginning to believe they are without souls.  Voters please see the facts which are as clear as the nose on your face.

This is all a big Kabuki Play. The object here has nothing to do with the deficit or the budget. It is all about extending the dominance of the top 2% and expanding the disparity in wealth and income in this country. That’s all it is.

A US default would hurt the ultra-rich the most. All US politicians (ALL) work for the ultra-rich. Therefore a default is NOT going to happen. It’s just a ruse to take away the entire social safety net and let the rich keep their blood money.

Reagan/Bush I expanded the national debt from $900B to $4.5T (over quadrupled) and then Bush II doubled it from $5.7T to $10.7T. During the later, the Rethugs voted 7 times to extend the debt ceiling without comment or fanfare. It’s not about that.

As most everyone already understands, Obama is just playing his role, trying to make it look halfway legit. He has done more damage to the average person than Bush II could ever have done. 

And yet progressive-wannabee Democrats just keep following him around with their noses up his rear. It’s really unbelievable.

Third party? Check out the one that’s been there all along. The one whose platform planks are (in order): 1) Comprehensive Campaign Finance Reform, 2) Direct Democracy as a response to Local needs, 3) Community Activism building communities that nurture families, generate local food, good jobs, housing and public services, 4) Media Reform and Free Speech for All.

Any questions?

Barbara Crowley

July 12, 2011, 3:47 p.m.

I suspect the Republicans know exactly what they are doing and just don’t care how they hurt the country, business, the stock market and mostly the people. If they insist on their way it means the deficit will go up - a lot because interest rates will go up and we will have to pay billions more each year. So it is obvious in reality the Republicans do not care one iota about the deficit. They care about the rich campaign donors, making Obama fail (but in my opinion Obama has not helped himself at all because he caves at every turn). They want their donations no matter what.

They do have their lies down pat. They insist that tax cuts create jobs and corporations will create jobs if they have more money regardless of all the data to prove the opposite. If more money created jobs we would be swimming in worker shortages because the corporations are sitting on trillions and not creating jobs. What creates jobs is demand. And we have no demand because so many have no money to spend. In fact the REpublican plan would probably increase unemployment even more.

What makes me sick is that the Democrats don’t say these things. They seem to be clueless about economics too. Obama evidently has no economic advisors anymore. They all quit and he hasn’t replaced them so he know nothing about economics either.

Also Obama has never seriously tried a job creation program. They government is the best vehicle for job creation. Ask FDR.

My last point in this comment is that for reason unknown to me Obama neglected to pass a budget when he had both houses on his side. It was unbelievable. Then because of his neglect of the people they voted in these T baggers and here we are. Unfortunately with a bit of forethought this all could have been prevented. We have an inexperienced and weal president. Not my opinion but his inaction except trillions to Wall Street and our useless wars to feed the rich. It’s a very sad time for the US and people are losing faith in our country. No big surprise. I think we need a challenger for the Democratic nomination.

Gerardo De Sola

July 12, 2011, 11:02 p.m.

Both Reps and Demas are a bunch of crooks behaving irresponsible towards the American people. They only work for the special interest and the greediness. We are suffering and they dont care I wish you all you know what

Barry Schmittou

July 13, 2011, 8:34 a.m.

I believe the following evidence supports what many of your comments say.

I have requested a treason and organized crime investigation of multiple insurance companies and consultant doctors they pay who are endangering lives in the U.S., and the DOL and DOJ’s failure to stop them from violating many laws and destroying the lives of many very sick and injured Americans.

The evidence includes quotes from numerous Judges that prove doctors paid by insurance companies ignore brain lesions, Multiple Sclerosis, cardiac conditions and much more.

To see the evidence and my request for an investigation please go to : http://www.treasonevidence.blogspot.com

I pray every citizen will consider submitting this evidence to your elected officials and local and Federal Grand Juries if you are ever selected.

Barbara:  The reason we didn’t pass a budget with both houses on our side was because the Republicans threatened to filibuster.  We couldn’t afford to do that at the time, so we let it slide.  As for President Obama, I think he’s doing exactly what I want him to do….hold firm on raising revenue as well as cutting spending.  You can’t pay bills without money coming in, and we need MORE money in order to get the bills that we currently have paid.  If we curb spending and use add’l revenue to pay the bills down, our deficit would go down.  As for Medicare, I’m 65, and I would have been MORE than happy to NOT have to apply for Medicare until I WANT to apply for it.  I don’t think there should be a mandatory age to apply for Medicare.  If you turn 65 and you are still working a full-time job and don’t need Medicare, you should have the option of NOT having to apply.  As it stands, I was basically “forced” to apply for Medicare Part A even tho’ I didn’t want to.  I know it doesn’t cost me anything, but it was the principle of the thing….I should be able to file for Medicare at my own pace, and I think there are a few others out there that would agree.  So, if they want to raise the Medicare age to 67 and the same for Social Security….I’m all for it.  But, I also agree with our president that we need additional revenue, and if it means taxing our more lucrative taxpayers and corporations, then so be it!

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