Biden Begins Budget Negotiations


By Ron Kramer

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.

Visit our website if you'd like more information on Schneider Downs Tax Advisory Group.


Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.


You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.