US debt limit bill gives political cover to both parties

Jan 24 2013, 11:36 IST
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US debt limit bill gives political cover to both parties. (Reuters) US debt limit bill gives political cover to both parties. (Reuters)
SummaryPrevious budget dramas in Washington produced bargains that made it look like Congress was making great strides, without actually doing so.

world's largest economy can gain control of a $16.4 trillion national debt.

There was the 2010 presidential commission to find budget solutions, a 2011 congressional "super committee" that was supposed to put the government on a sound fiscal path and a "fiscal cliff" of late 2012 designed to force big decisions.

All sputtered.

Now, Republicans have crafted a debt limit increase without setting a specific new ceiling on borrowing that they could be blamed for.

In a tough-looking move, their legislation aims to withhold lawmakers' pay if the Senate or House fail to produce a non-binding budget plan this year. Some lawmakers argue that the pay provision violates the Constitution, which restricts Congress' ability to "vary" its own compensation.

Wednesday's bill does not require the Senate and House to agree on a budget, only to pass their own budget bills. If the Republican-controlled House and Democratic-controlled Senate manage to pass proposals, they are likely to be vastly different.

Last year, Democrats in the Senate rejected a House Republican budget that projected a plan to bring the budget into balance gradually over a 30-year period.

In pledging to eliminate budget deficits within 10 years, House Republicans are putting themselves on a path to writing a budget that will cut even more deeply into Medicare and Medicaid healthcare for the elderly, disabled and poor, and the Social Security retirement program.

Budget experts think the 10-year pledge will be a steep climb for Republicans, especially if they refuse to use any tax increases for deficit reduction and if they stick to previous proposals to slowly phase in benefit cuts for programs like Medicare.

Meanwhile, Senate Democrats are talking about defending those social safety net programs, investing in other programs and further raising taxes on the rich and big corporations, despite Republican insistence that tax increases are off the table.

Whether or not there is a sweet spot for compromise remains to be seen.

But with Senate passage looking certain on the Republican debt limit bill and Obama's approval all but guaranteed, Republicans are the ones who have blinked in this latest duel.

They have agreed to let government borrowing continue without extracting one penny's worth of spending cuts.

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