The White House and Congress this week will step up efforts to reach a deal on raising the government’s borrowing limit before an Aug. 2 deadline, with a flurry of meetings scheduled to hammer out a bipartisan consensus on ways to significantly reduce the nation’s $1.3 trillion deficit and $14.3 trillion debt. The intensified negotiations come as Republicans pursue a summer agenda they say is aimed at job creation and economic growth, though the debt ceiling debate will likely overshadow all of their planned legislative action.
A group of Republican and Democratic lawmakers will huddle three times this week with Vice President Biden to negotiate an agreement that has eluded them in six previous meetings.
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Treasury Secretary Tim Geithner requested a $2 trillion increase in the nation’s borrowing limit and predicted dire economic consequences if Congress fails to act by the August deadline, when the government would effectively default on its loans.
The two parties, however, are nowhere near agreement.
Republicans are insisting on deep budget cuts to at least match Geithner’s $2 trillion borrowing request. But Democrats want smaller cuts coupled with tax increases that the GOP is refusing to even consider.
Republicans have also proposed a Medicare reform plan that would reduce some benefits and ultimately replace the current system with a voucherlike program that would help seniors buy private health insurance. Democrats say they will not approve any plan that cuts Medicare benefits.
House Majority Leader Eric Cantor, R-Va., said negotiators want to avoid waiting until the last minute to strike an agreement on the debt ceiling because of the potential negative effects on financial markets. But he warned Monday that if the deal did not yield significant cuts, a vote to raise the debt ceiling could also have dire economic consequences.
“If you just check the box and raise the debt ceiling, I believe the markets take care of it for you,” Cantor told reporters. “Interest rates will skyrocket, and there will be no way for us to see any return to growth anytime soon. We will have to raise taxes and the rest. No one wants that. We’re not going to go along with that kind of outcome.”
Cantor said Republicans will move to pass a number of “legislative remedies” in the coming weeks aimed at bolstering the ailing economy.
One measure would scrutinize the impact of Environmental Protection Agency regulations on businesses and the economy. Another would make it easier for oil companies to obtain drilling permits in Alaska. A third bill would expedite construction of the Keystone oil pipeline to carry crude from Alberta, Canada, into the United States.
Democrats have seized on the apparent public backlash against the GOP plan to alter Medicare as well as the party’s resistance to legislation that would have eliminated tax breaks for the nation’s largest oil companies.
“Instead of focusing on jobs, House Republicans have been focused on ending Medicare and protecting tax breaks for Big Oil,” said Drew Hammill, spokesman for House Minority Leader Nancy Pelosi. “Now, we see it will be a summer of the same — no action on jobs, just more Republican policies that destroy jobs and hurt America’s middle class.”
