Congressional leaders on Sunday showed no signs of emerging from their corners to resolve the next step in the financial crisis, with Democrats still talking about higher taxes on the wealthy and the Senate’s top Republican suggesting that a crippling default on U.S. loans was possible unless there were significant cuts in government spending.
“It’s a shame we have to use whatever leverage we have in Congress to get the president to deal with the biggest problem confronting our future, and that’s our excessive spending,” said Sen. Mitch McConnell (R-Ky.).
Last week’s deal to avert the combination of end-of-year tax increases and spending cuts known as the “fiscal cliff” held income tax rates steady for 99 percent of Americans but left some other major pieces of business unresolved.
By late February or early March, the Treasury Department will run out of options to cover the nation’s debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling. Economists warn that a default could trigger a global recession.
Also looming are deep automatic spending cuts expected to take effect at the beginning of March that could further erase fragile gains in the U.S. economy. Then on March 27, the temporary measure that funds government activities expires, and congressional approval will be needed to keep the government running. It’s one more chance to fight over spending
Lawmakers said debt talks will consume Congress in the coming weeks, likely delaying any consideration of an expected White House proposal on gun restrictions in the wake of the Connecticut school shooting.
Republicans say they are willing to raise the debt ceiling but insist any increase must be paired with significant savings from Medicare, Medicaid and
other government benefit programs. President Barack Obama has said he’s willing to consider spending cuts separately but won’t bargain over the government’s borrowing authority.
“One thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up,” Obama said in his weekly radio and Internet address.
Democrats said further tax increases for the wealthiest Americans were still possible as Congress looks to close the gap between revenues and expenditures. Democrats point out that Obama has already agreed to significant spending cuts, and that the latest deal only gets the nation to about half of the revenue it needs to resolve the red ink.