December 9, 2013
POLITICAL STAND-OFF ON CAPITOL HILLMonday, October 14, 2013
Spending stumbling block to US budget deal
Negotiations expected to go down to the wire as Thursday’s debt ceiling deadline approaches
WASHINGTON — Senate Republicans and Democrats hit an impasse yesterday over spending in their last-ditch struggle to avoid an economy-jarring default in just four days and end a partial government shutdown entering its third week.
After inconclusive talks between US President Barack Obama and House Republicans, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell took charge yesterday trying to end the crises, although discussions failed to break the stalemate. The two negotiators are at loggerheads over Democratic demands to undo the automatic, across-the-board spending cuts to domestic and defence programmes that Republicans see as crucial to reducing the nation’s deficit.
Reid said he was confident a deal could be reached yesterday. “I’m optimistic about the prospects for a positive conclusion to the issues before this country today,” he said as the Senate finished a rare Sunday session.
McConnell insisted that a solution was readily available in the proposal from a bipartisan group of 12 senators, led by Republican Senator Susan Collins and Democratic Senator Joe Manchin, that would re-open the government and fund it at current levels for six months while raising the debt limit through to January 31.
“It’s time for Democrat leaders to take ‘yes’ for an answer,” McConnell said in a statement.
The US government has been partially shut since October 1 because of Congress’ failure to pass a normally routine temporary spending bill. Separately, Obama wants Congress to extend the government’s borrowing authority — another matter that usually had been routine.
The latest snag comes as 350,000 federal workers remain idle, hundreds of thousands more work without pay and an array of government services, from home-loan applications to environmental inspections, remain on hold on the 13th day of the shutdown. Last week, the effects of the shutdown reached businesses, such as concessions and hotels near federal parks, that depend on government programmes.
Many national parks and monuments remain closed, drawing a protest at the National World War II Memorial yesterday that included Tea Party-backed conservative lawmakers who had unsuccessfully demanded defunding of Obama’s three-year-old signature healthcare law in exchange for keeping the government open.
IMF FEARS DEFAULT
Particularly unnerving to world economies is the prospect of the United States defaulting on its financial obligations on Thursday if Congress fails to raise the borrowing authority above the US$16.7-trillion debt limit. Christine Lagarde, the International Monetary Fund’s managing director, spoke fearfully about the disruption and uncertainty again yesteday, warning of a “risk of tipping, yet again, into recession” after the fitful recovery from the 2008 global recession. The reaction of world financial markets and the Dow Jones this morning will influence any congressional talks.
Congress is racing the clock to get a deal done, faced with time-consuming Senate procedures that could slow legislation, likely opposition from hardcore conservative tea party-backed lawmakers, and certain resistance in the Republican-led House of Representatives before a bill gets to Obama. Politically, Republicans are reeling, bearing a substantial amount of the blame for the government shutdown and stalemate, according to recent polls.
“We’re in a free-fall as Republicans, but Democrats are not far behind,” said Republican Senator Lindsey Graham, in warning Democrats about seizing on the Republicans’ bruised brand as leverage to extract more concessions.
McConnell and Republicans want to continue current spending at US$986.7 billion and leave untouched the new round of cuts in January, commonly known as the sequester, that would reduce the amount to US$967 billion.
Democrats want to figure out a way to undo the reductions, plus a long-term extension of the debt limit increase and a short-term spending bill to reopen the government.
Senator Dick Durbin of Illinois, the number two Democrat in the Senate, told reporters that the two sides are roughly US$70 billion apart, the difference between the US$1.058-trillion Senate budget amount and the US$988 billion envisioned by House Budget Committee Chairman Paul Ryan. “We haven’t picked a number, but clearly we need to negotiate between those two,” Durbin said.
Republicans dismiss the latest request as Reid moving the goalposts in negotiations as they were getting closer to resolving the stalemate that has paralyzed Washington. They also argue that it is disingenuous for Democrats to resist any changes in the three-year-old healthcare law while trying to undo the 2011 Budget law that put the cuts on track.
Republican Senators Lindsey Graham and Rand Paul said they would not support any deal that upends the spending limits imposed by the 2011 law, and predicted that their Senate Republican colleagues would oppose it as well. The House of Representatives remains a possible headache in the coming week. The House was out of play yesterday, where Speaker John Boehner told fellow Republican lawmakers early Saturday that his talks with the president had ground to a halt. Obama telephoned House Democratic leader Nancy Pelosi yesterday, highlighting the need for any increase in the debt limit to be passed without concessions.
Herald with AP, Reuters