Republicans are refusing to back down in negotiations with the Obama administration and congressional Democrats on raising the debt ceiling.
The GOP leaders insist that they won’t agree to raise the debt ceiling, now at $14.3 trillion, without significant federal spending cuts. Democrats want to include tax increases in the deficit-reduction package, and House Majority Leader Eric Cantor led Republicans out of bipartisan budget talks headed by Vice President Joe Biden on June 23, citing an impasse over taxes.
Rep. Paul Ryan, head of the House Budget Committee, explained the GOP’s position in an interview with Newsmax: “The problem here is spending, and that’s what we’re focusing on. The president is trying to get us to raise taxes. We’re not going to do that. We’re going to cut spending. And if he wants to raise the debt limit and prevent default, then he’s going to have to cut spending.”
Senate Minority Leader Mitch McConnell and other Republicans, notably House Speaker John Boehner, say higher taxes will further slow the economy and kill jobs.
They also make a practical point: With Republicans in control of the House, and with filibuster power in the Senate, tax hikes won't get through Congress.
"If government spending was the answer to an economic slowdown, we'd be in a boom right now," McConnell said. "Instead, we're facing record deficits and debt, and a seemingly endless stream of bad economic news."
The Republicans' staunch stand on reducing spending — even if it includes cuts to entitlements — will bring on fierce attacks from the Democrats.
“This has always been the problem for the Republicans when they talk about entitlement programs,” said Matt Towery, syndicated columnist and CEO of the nonpartisan InsiderAdvantage polling firm.
“It’s great to talk about it. But when you get down into the meat of it, you allow potential Democratic opponents, who generally are the ones who are supportive of the entitlements, to spin your effort to curtail the cost of entitlements into an effort to put Grandma out on the street with no healthcare. They might be empty scare tactics—but they can work”
And an economic expert paints a grim picture if the debt ceiling negotiations fall apart.
“The United States would default on its debt for the first time in its history,” which could lead to “a severe global financial crisis [possible larger in magnitude than the one the world began experiencing in 2007 and 2008], and a significant long-term increase in the United States’ borrowing costs, which could cost it its leadership position in the global economy,” New York Times political observer Nate Silver wrote in his FiveThirtyEight column.
“Another severe recession would probably be about the best-case outcome if that were to occur.”
But Rep. Ryan insists there is no way to get Democrats to agree to significant spending cuts “other than the debt limit.”
As the standoff continues, “for now, Democrats are holding their ground,” Ezra Klein notes in The Washington Post.
“But at some point, this will cease to be a clear choice between two budget plans and begin to be a question over whether we can raise the debt ceiling. And that, Republicans are betting, is when the Democrats will stop holding their ground.”