Biden to the rescue
by digby
Negotiations over raising the nation’s debt ceiling will hit a heightened, more critical phase on Thursday when a bipartisan, bicameral group of lawmakers are set to meet with Vice President Joseph Biden at the Blair House….
In addition to raising the debt ceiling from its current limit of $14.3 trillion, lawmakers would include legislative language in the bill that called for caps on government spending in over the next one or two years. The level at which that cap would be set is unclear and is likely to be a major fault line during discussions. In addition, lawmakers will include a debt failsafe “trigger” that would kick in once those caps expire. Such a policy — which would require that the ratio of debt-to-GDP be reduced to a certain level if Congress cannot stabilize it by the end of the decade — could take several forms. Democrats, however, will insist that revenue raisers or adjustments to the tax code be part of the deal. “That’s the ball game,” one top Democratic aide said of ensuring that tax policy be part of the final arrangement to raise the debt ceiling. “[T]hey want to make it a trigger that allows for revenue,” added another Democratic Senate aide. “But this arrangement wouldn’t preclude them from saying they will cap spending for, say, 2012. It would allow them to say here is your spending.” Pulling off such a legislative arrangement will be a challenge for the administration. For starters, the White House has not formally given up its position that there should be a vote on a “clean” debt-ceiling bill. Moderate Senate Democrats, however, are insisting the deficit or debt-reduction measures be added. A top aide for one of those Senators said there was deep concern that a failed party-line vote (House Republicans wouldn’t pass a “clean” bill) would damage both the markets and the White House.
So, the Democrats want to include in the deal an option to raise taxes if deficit targets aren’t met. Odd incentives there, don’t you think? Is anyone seriously going to raise taxes in an election year?
Mitch McConnell weighs in:
“Let’s discuss the art of the possible,” Senate Minority Leader Mitch McConnell (R-Ky.) said on the senate floor Wednesday. “We all know tax increases won’t pass the House because of the damage they’d do to family budgets and businesses — and a bipartisan majority here in the Senate opposes raising taxes on families, energy production and small businesses across America. So let’s set that aside and find common ground.”
There you have it. “Common ground” equals spending cuts. In this scenario I’d say the most you can hope for from Democrats is that they don’t get caught up in the excitement and start slashing indiscriminately. At this point it’s all about limiting the damage.
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