- Sessions: Lawmakers Will Need Time to Look at Any Deal
- Pawlenty: Bachmann's Record is 'Nonexistent'
- Geithner Says Failure to Raise Debt Limit would be 'Catastrophic'
- IMF's Lagarde Sees 'Real Nasty Consequences' in Event of U.S. Default
- DeMint Insists on Balanced Budget Amendment
- Daley Says Obama Still Wants Larger Deal, But Hedges on Entitlements
- McConnell Confirms Big Deal is Off the Table
- McCarthy Looks to Biden Deal; Van Hollen Warns 'We are Nowhere Close'
Sessions: Lawmakers Will Need Time to Look at Any Deal
Senate Banking Committee ranking member Jeff Sessions echoed Treasury Secretary Timothy Geithner’s comments that while August 2 may be the nation’s default date, the time to make a deal on raising the debt ceiling is much sooner.
“We’re not just going to ratify some secret deal even if our good leaders plop it down on the floor of the Senate; we need at last seven days to review something as historic as this,” the Alabama Republican said on CBS’s Face the Nation.
Sessions added that with the breakdown of talks on a $4 trillion grand bargain, he’s pessimistic that any deal now would be “really good for America.”
Meanwhile, Sen. Bill Nelson, D-Fla., indicated that his side of the aisle sees no need to include entitlement reform in a debt-ceiling deal when closing tax loopholes would be as effective.
“If you took the money that the federal government would save from all of those tax loopholes and instead used that to lower all of the tax levels of the different tax brackets, what you’d have is a revenue-neutral position, but because you would simplify the tax code, you would end up raising more revenue because it would spur up the engine of economic growth,” he said.
Pawlenty: Bachmann's Record is 'Nonexistent'
GOP presidential candidate Tim Pawlenty, the former governor of Minnesota, dropped his nice-guy posture to slam rival Michele Bachmann, the Minnesota congresswoman and tea party darling who is rousting him in the polls.
Asked about Bachmann on NBC’s Meet the Press, Pawlenty said, “Her record of accomplishment in Congress is nonexistent. We’re not just looking for someone who has speech capabilities. I have executive leadership in a public setting with a record of accomplishment; she has served in Congress and her record is nonexistent.”
Earlier in the program, asked about what would set him apart from other presidential candidates, Pawlenty said, “There’s a bunch of people in this race running around flapping their jaws but don’t have a record to show for it.”
Geithner Says Failure to Raise Debt Limit would be 'Catastrophic'
Treasury Secretary Timothy Geithner warned of “catastrophic damage across the U.S. economy and global economy” if Congress does not raise the debt ceiling by August 2. “There is no credible way to give Congress more time. They have to act by the 2nd,” he said, in an interview on NBC’s Meet the Press.
If Congress doesn’t act by the deadline, global financial institutions will downgrade the U.S. credit rating for the first time in U.S. history, Geithner warned.
In another appearance Sunday on CBS's Face the Nation, Geithner was asked about comments by Michele Bachmann and others downplaying his "doomsday" warnings on the debt limit.
"The people who say that we could take the risk and default--there’s no responsible leader that argues that would be a credible path," Geithner said.
"It’s a political moment, people are trying to get attention, they say really amazing things," he added. "But there’s no credible argument; no responsible leader would say the United States of America for the first time in its history should not pay its bills and meet its obligations. That would be catastrophic for the economy; everybody understands that. There’s just a lot of political theater in this business."
In the wake of Friday's unexpectedly poor jobs report, Geithner also predicted that it “will take a long time” to feel the effects of an economic recovery.
“The tragic effects of a crisis this deep and bad” could be worse than many Americans have ever experienced in their lives, he said on Meet the Press.
He added that economic growth slowed in the first half of this year in part because of the combination of the spike in gas prices due to unrest in the Middle East, a slew of disastrous weather events across the country, cutbacks in spending from state and local governments, and the tsunami and earthquake in Japan.
Geithner declined to respond to rumors that he is thinking of leaving his post. “I’ve got a lot on my plate, and I’ve got a lot of ahead of me,” he said, adding that he expects to stay in his position “for the foreseeable future.”
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IMF's Lagarde Sees 'Real Nasty Consequences' in Event of U.S. Default
Christine Lagarde, the new International Monetary Fund chief, predicted "real nasty consequences" for the U.S. and global economies if Congress fails to raise the debt limit by August 2, the date at which the U.S. Treasury will not have enough money to pay its bills.
Lagarde said Sunday on ABC's "This Week" that a U.S. default on the debt ceiling would lead to “interest hikes, stock markets taking a huge hit,” and would jeopardize global economic stability.
“It would be bad news for the U.S. economy,” with a “heavier burden to be borne by U.S. taxpayers,” she said.
Lagarde added that she believes that the White House and congressional leaders will reach a deal before August 2.
“I can’t imagine for a second that the U.S. will default,” she said. “I would hope there’s enough bipartisan intelligence to work it out.”
DeMint Insists on Balanced Budget Amendment
Sen. Jim DeMint, R-S.C., said on Fox News Sunday that tea party Republicans will continue to refuse to raise the debt ceiling by August 2 unless the vote is packaged with a constitutional amendment requiring the federal government to keep a balanced budget.
“We will give the president his increase in the debt limit in return for reasonable cuts this year and his agreement to send a balanced budget amendment to the states,” DeMint said.
He dismissed warnings from Treasury Secretary Timothy Geithner and many other economists that a default on the debt ceiling could trigger dire economic reverberations.
“Secretary Geithner is being irresponsible. He’s playing Chicken Little,” DeMint said.
“The president’s obligation is to pay those bills and we should have a contingency plan.”
But, like other Republican leaders, DeMint said efforts to include broader tax reforms in a deal should be pushed to a later date.
“There will be plenty of time to do the things we need to do,” he said.
Of efforts to include reforms to Social Security as part of the debt talks, he said: “Younger workers would much prefer a 401k style plan for Social Security, and these things we’ll have to work out in the next couple of years. We’re not going to do it in the next couple of weeks.”
DeMint also said that he does not plan to run for president in 2012.
Daley Says Obama Still Wants Larger Deal, But Hedges on Entitlements
White House Chief of Staff William Daley said on Sunday that President Obama remains committed to pushing for tenets of a bigger deficit-cutting package despite Republicans’ pullout from those efforts on Saturday.
“That’s the president’s commitment. He’s not someone who’s going to walk away from a tough fight. He’s not someone who came to this town to do little things; he came to do big things,” Daley said on ABC’s This Week.
“A number around $4 trillion is the number that will make a serious dent in our deficit and send a signal that” the U.S. is serious about addressing its deficit, he said.
But he signaled that the president may back down from putting cuts to Medicare and Social Security on the table.
“Social Security is not about the deficit. Medicare has got to be strengthened. It will run out of money in five years if we don’t do something,” Daley said. Of the entitlement programs, he said: “People pay into that, they expect benefits. They don’t want to see that trashed.”
McConnell Confirms Big Deal is Off the Table
Senate Republican Leader Mitch McConnell reaffirmed Sunday that prospects for a broader deal with the White House to cut $4 trillion from the federal deficit as part of an agreement to raise the national debt ceiling are dead. He repeatedly cited Friday’s dismal 9.2 percent unemployment report as justification for House Speaker John Boehner’s statement Saturday night that he is pulling out of talks for a large deal. Republicans have pounced on those numbers to push back against Democrats’ proposals to include a reform of the tax code, including some tax increases in the broader deal.
Asked on Fox News Sunday if a “big deal” is off the table, McConnell said, “I think it is—it’s extraordinarily difficult with 9.2 percent unemployment.”
Asked how the jobs report affected the negotiations, he replied, “It almost incentivized us to do a big package without raising taxes.”
Talks on the broader package have stalled in part as Democrats have raised concerns about cutting spending on Medicare and Social Security while Republicans have balked at prospects for ending some tax cuts—but McConnell said Republicans may insist that even a smaller deficit-cutting package include cuts to entitlement programs.
“You can’t do anything serious about our deficit without impacting biggest percentage of the budget. I commend the president for putting Medicare and Social Security on the table,” he said.
McConnell said Republicans will now push for a deal that cuts spending put pushes off tax reform until a later date.
“We believe tax reform is long overdue; the president believes that as well. We want to get rates down, get preferences out, but it’s extremely difficult to do that in a week. We need to do it, but I don’t see how can do it in context” of a debt-ceiling deal, he said.
“I want the biggest deal possible, but we’re not going to raise taxes in middle of this horrible economic situation.”
Asked if Republicans have a contingency plan should Congress fail to raise the debt ceiling he said, “there’s always a contingency plan,” but declined to offer details.
“I’ll let you know [what it looks like],” he said. “No one’s talking about not raising the debt ceiling. We’re talking about using this request to raise the ceiling as an opportunity to do something necessary about spending and the debt.”
McCarthy Looks to Biden Deal; Van Hollen Warns 'We are Nowhere Close'
The high-stakes game of chicken continued between House Republican and Democratic leadership in separate segments on CNN's State of the Union Sunday, with House Majority Whip Kevin McCarthy, R-Calif., and House Budget ranking member Chris Van Hollen, D-Md., each blaming the opposing party for the breakdown of talks.
McCarthy confirmed that Republicans have no intention of negotiating on a large-scale deficit deal that would include revenue-raisers, citing Friday's jobs report as further proof that this is no time to be raising taxes.
"I’ve never found one tax increase that has created a job.... In principle, no. We're not going to go there," he said.
McCarthy said that Republicans are willing to accept a smaller, $2.4 trillion deal based on earlier bipartisan talks led by Vice President Joe Biden.
“We have sat in the room with the vice president, with the Democratic leaders, and they have agreed to $2.4 trillion in cuts," he said. "We have a format to get there.”
But Van Hollen, who was part of the Biden "gang of six," said those talks had not progressed as far as McCarthy seemed to suggest, and that even reaching a smaller deal will be an uphill battle.
"The vice president has said that we identified about a trillion dollars in savings. We are nowhere close to $2.4 trillion," he said. "...And let me say this: Even that trillion was counting on an overall agreement, which meant that the Republicans had to agree to some revenue component.”
Still, when pressed on whether Democrats might agree to a deal that included only cuts and no tax increases, Van Hollen suggested that his party was more willing to compromise than Republicans.
“We want to do deficit reduction, but we also recognize we have a responsibility to prevent the economy from tanking," he said. "...I would personally support raising the debt ceiling if we’re not able to reach an agreement. I would prefer to reach an agreement.”
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