WHEN SPEAKER of the House of Representatives John Boehner predicted “a hot weekend here” yesterday, he was not referring to the suffocating heatwave that has hit the eastern half of the US but to talks on raising the debt ceiling to prevent the US defaulting on its debt from August 2nd.
The protracted negotiations pit Republicans’ refusal to raise taxes against Democrats’ reluctance to slash social programmes. They have become a test of the ability of America’s polarised body politic to govern the country.
It was impossible to say whether the debt crisis was any closer to resolution. Senator Mark Pryor of Arkansas declared it a “cliffhanger moment”.
There are now three plans on the table, none of which has secured agreement. Since Thursday afternoon, priority has shifted to the proposal being negotiated by President Barack Obama and Mr Boehner.
According to press reports, the Obama-Boehner plan would enact $1 trillion in spending cuts negotiated earlier by vice-president Joe Biden, gradually raise the age of eligibility for Medicare and cut some social security benefits.
But the future of Bush era tax cuts remains an obstacle. Mr Obama wants to extend tax cuts permanently for families earning less than $250,000 (€174,000) a year, but stop cuts for those with more. The deal would also contain a commitment to reform the tax code by lowering all tax rates while eliminating loopholes and subsidies. Mr Boehner refuses to end the tax cuts for the rich.
Mr Obama met Democratic congressmen for two hours late Thursday. They appear to be in revolt over what they fear will be a second “cave-in” by the president – the first being his agreement last December to extend Bush era tax cuts for families earning more than $250,000 a year until the end of 2012. “We are very volcanic at this moment,” said Senator Barbara Mikulski of Maryland.
Part of the wrangling is a semantic dispute over whether new revenue necessarily equates to increased taxes. On Thursday night, the Washington rumour mill had it that Mr Obama was prepared to accept a plan without increased revenue. Such a deal “obviously” could not pass the Senate, the Democratic budget committee chairman Kent Conrad said.
In a town hall meeting with a Democratic audience at the University of Maryland yesterday, Mr Obama seemed to reject reports that he was about to surrender to Republicans.
“If we’re going to reduce our deficits, the wealthiest Americans and the biggest corporations should do their part as well,” he said.
“This isn’t some wild-eyed socialist position . . . This isn’t about punishing wealth. This is about asking people who have benefited the most over the last decade to share in the sacrifice.”
Meanwhile, the Senate rejected by a vote of 51-46 the “Cut, Cap and Balance” Bill that passed the House on Tuesday night. It was clear from the outset that the Bill had no hope of becoming law. Like much of the debt ceiling debate, it was pure theatrics, enabling Republicans to show they are keeping their pledge not to raise taxes.
Senate majority leader Harry Reid expressed frustration with Congress for fiddling while America’s financial credibility burns.
“There is simply no more time to waste debating and voting on measures that have no hopes of becoming law,” he said. There was “no more time to waste playing partisan games”, he added.
Mr Reid cancelled plans to keep the Senate in session over the weekend. The “Gang of Six” proposal devised earlier in the week by three Republican and three Democratic senators is now on hold, he said. Nor will Congress move ahead with Senator Mitch McConnell’s proposal for an elaborate dance that would enable Mr Obama to raise the debt ceiling three times between now and the 2012 presidential election, each time vetoing a “resolution of disapproval” by Congress.
In recent days, the so-called “constitutional option”, based on the idea that the 14th amendment’s provision that the validity of US debt “shall not be questioned”, was interpreted to mean that Mr Obama could unilaterally raise the debt limit to prevent default. This was endorsed by the former president Bill Clinton in an interview.
But Mr Obama ruled it out yesterday saying: “I’ve talked to my lawyers. They are not persuaded that that is a winning argument.”