On Thursday, May 5, Vice President Biden conducted his first meeting with a bipartisan congressional group aimed at cutting a deal on a framework to reduce the U.S. budget deficit. President Obama and U.S. lawmakers face an August 2nd deadline to pass legislation that will permit the government to increase its borrowing authority (the debt ceiling) beyond $14.3 trillion to prevent default on U.S. obligations. President Obama hopes that Biden’s group can craft a deficit reduction agreement that would gather enough votes to pass legislation to increase the debt ceiling and avoid the impeding doom promised by Treasury Secretary Geithner.
President Obama has requested Congress to pass another increase in the federal debt ceiling in a “clean debt limit” bill without pre-conditions limiting spending. If Congress grants this “Kid in the Candy Store” approach, how serious do you think efforts to reduce government spending will be in its aftermath? Recent polls indicate that the American people want spending cuts and budget reforms tied to any debt ceiling increase.
In a recent survey conducted jointly by Resurgent Republic and the American Action Forum, President Obama’s “clean debt limit” policy is supported by only 1 out of 10 voters. The preferred option of 47% of the voters is for raising the debt limit, but only in exchange for substantial spending cuts and a commitment to reduce the deficit. Thirty-five percent of voters favor not raising the debt limit under any circumstances.
The following chart from the Resurgent Republic/American Action Forum Survey, summarizes how voters stack up on the question of raising the debt ceiling:
Source: Resurgent Republic/American Action Forum | National Survey of Registered Voters | April 17-20, 2011
The U.S. Treasury is currently borrowing $125 billion per month; therefore, the debt ceiling would have to increase by $1.5 trillion just to get through the next year.
As the budget and debt ceiling talks heat up, you can already see both sides caving to political pressure. Apparently, any tough decisions on entitlements will be kicked down the road past the 2012 election. It remains to be seen how the budget/debt ceiling battle will play itself out over the next several weeks.
For further information, please contact Ron Kramer.
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