The political stalemate over taxes and the debt limit continues, with President Obama saying a deal needs to be reached by July 22 to give Congress time to draft and approve the appropriate legislation before the government runs out of emergency funding measures.
The Treasury Department last week reaffirmed its estimate that without an increase in the debt limit, the emergency measures would only last until Aug 2, when the government would face default.
In a press conference last week, the President said his party had agreed to substantial spending cuts but that the Republicans had refused to “move off their maximalist position” against any new tax revenues. He also advocated changing some tax policies that largely benefit wealthy individuals and certain companies.
House Speaker John Boehner replied that the Republican-controlled House would only approve an increase in the debt limit if no tax increases were involved – the issue over which Republican negotiators walked out of earlier budget talks. Boehner accused Obama of ignoring “legislative and economic reality.”
The Concord Coalition and other bipartisan groups have warned that the country’s fiscal and demographic challenges are so large that both spending cuts and revenue increases should be on the table.
Because of the debt limit issue, the Senate cancelled plans for a recess this week. Speculation continues over whether congressional Republicans, while opposing increases in tax rates, might agree to the elimination of some subsidies in the tax code that benefit certain corporations and individuals.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) said last week that Senate Democrats had “reached an agreement” on their own budget plan and that it could be released as early as this week.External links:President Obama's White House Press ConferenceSpeaker Boehner’s Response to President ObamaSenator Kent Conrad Says Budget Ready to GoA Question to the President and Two Treasury Letters to the HillTreasury: No Change to Aug. 2 Estimate of Borrowing Authority Exhaustion International Monetary Fund Report on U.S. Economic PolicyMoody's Statement on U.S. Bond Ratings