US Debt Ceiling Talks Crucial to Obama Administration

Debt Ceiling Debate between Republicans and Democrats
Debt Ceiling: Crucial to US Economy

The Obama administration were in critical condition for the clock is ticking toward the August 2 deadline of raising the United States debt ceiling. According to a news article posted by reuters.com the main obstacles of the Democrats and the  Obama administration of the proposed tax increase was the opposition of the Republican in Congress.

In a separate news reported by The New York Times tax increase were among the least popular things that the Congress had paid attention to, but the year 2011 the Republicans had showed interest to the subject. The debt limit has emerged as the central point of conflict between the Republicans and the Obama administration.

The Republicans were fighting for an increase in debt limits and not on increase taxes as what the Obama administration were trying to impose. If the current $14.29 trillion debt ceiling of the US will have to default on its debt; according to the administration. Without borrowing, it will not be able to pay the government’s daily bills.

The $14.29 trillion debt limit was previously announced by Treasury Secretary Timothy F. Geithner. He was the one who put the August 2 as the rough date on which the debt ceiling will reach its critical condition.

The Democrats in Congress had made measures to increase revenues and make spending cuts but the Republicans rebuffed the Democratic insistence. A $4 trillion deficit-reduction deal was pushed by President Obama. The deal includes reductions in Social Security, Medicare and Medicaid. The Republicans supported at first but eventually backtracked and opposed the tax increase.

With the recent developments regarding the debt ceiling talks, there were already reports that negotiators from both the administration and the Republicans were starting to close in a debt deal.  White House spokesman Jay Carney was quoted as saying that “there had been momentum toward a balanced deficit agreement.” The spokesman had also insisted that “we are not close to a deal,” said Carney.

The US and World Stock market had rebounded on Thursday after positive news of a close deal with the debt ceiling issue but one thing is clear, both sides were still at odds over the issue of tax cuts and tax increases.

The Obama administration and the Congress could agree to revenue increases and spending cuts but will put on hold the issue regarding tax breaks that have been enjoyed by select individuals and companies.

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