(NECN: Peter Howe, Boston) You may be working next week — but that’s something normally the U.S. Senate never would do.
But with the clock rapidly ticking towards an Aug. 2 deadline on raising the national debt ceiling or risking a Third World-style debt default, Washington’s been making zero apparent progress towards a deal. That led Majority Leader Harry Reid to cancel the planned week off for the Senate next week following the Independence Day holiday.
“I’ve had a number of senators, both Democrats and Republicans, say, ‘But do we really have to be here?’ Well,” Reid said, “we have to be here … We need to stay on top of this . These big issues are resolved by people meeting, people discussing things.”
However, pressed by reporters at the Capitol on why the entire Senate had to be in next week, as opposed to just party leaders and budget-deal negotiators, the best Reid could come up with was: “The caucus needs to feel that they’re engaged in the debate around here. That’s the reason.”
What’s before Congress is a vote to allow the U.S. to go another $2.4 trillion in debt, beyond its current $14.3 trillion of debt. That would stave off another debt vote before the end of 2012. Treasury Secretary Timothy F. Geithner has warned that Congress must act by Aug. 2 at the latest to avoid the U.S. risking a default — but that’s a date that’s moved around several times this spring, and Republicans say there’s no reason the U.S. couldn’t keep paying interest on its debts and just stop paying government employees, contractors, or social-welfare payment recipients while a debt-ceiling deal is worked out.
“This August 2nd deadline on the debt ceiling is serious — it’s very serious,” said Sen. Richard Durbin, an Illinois Democrat who is a senior member of Reid’s leadership team.
James T. Brett, CEO of The New England Council, a non-partisan group that advocates for New England states and employers in Washington, said he’s convinced failure to act by Aug. 2 — and ideally, well before the final hour — could have severe consequences.
“We need to do this, because if we don’t, we’re going to send an economic shock wave throughout the world,” rattling bond and equity markets and damaging other countries’ faith in U.S. leadership, Brett said. With Reid’s “no vacation” diktat, Brett said, “I think it sends a good message to the business community and Wall Street: People in Washington are very serious about trying to solve this problem.”
Ultimately, this debate seems to be more and more hardening down to one essential question: Do you believe the federal budget should be fixed with no tax increases for anybody, only further cuts in government spending?
That seems to be a debate that the most passionate elements in both parties are actually happy to have and to fight to a clear win or loss for one side or the other.
Senate Republican Leader Mitch McConnell said, “Republicans oppose tax hikes, and Democrats have already shown they won’t raise taxes in a down economy either.”
Sen. Charles Schumer, a New York Democrat, on Thursday echoed criticisms made by President Obama a day earlier, saying, “It seems like Leader McConnell is willing to tank the economy for the sake of protecting tax breaks for oil companies, yachts, corporate jets.”
Reid himself said: “The main obstacle, and I want to be very clear, to finding common ground is Republicans’ stubborn insistence on protecting taxpayer funded giveaways to corporations and individuals that don’t need the giveaways.”
And of course, that’s only the Senate. House Speaker John Boehner, who leads a large group of Republican members of Congress convinced the problem is entirely that the U.S. government spends too much, not taxes too little, said the only way Obama and Democrats will ever get a debt-ceiling vote through the House is if they agree to long-term future spending cuts more than the increase in the national debt limit, and no tax increases. “The longer the president denies these realities,” Boehner said, “the more difficult he makes this process.”
With rhetoric like that, Brett said, “You see both sides really digging in, and, quite frankly, both sides are appealing to their base … Now the question is, you’ve got to come to the middle. And hopefully, the president will also play more of a major role in the next several days bringing these people together.”
Given that Congress has managed to fight its way through 78 votes on the debt ceiling since 1960, some that went to the very final hour, Brett, a former senior Massachusetts House of Representatives leader, said, “Somehow I see something emerging. I just don’t know what it’s going to look like.”
And if the U.S. ever does default on its debt, top Wall Street bond-rating agency Standard & Poor’s said Thursday it will slash the U.S. credit rating from AAA to D. That would, theoretically, cause the U.S. government to have to pay much higher interest rates to borrow money and raise rates for all American borrowers. Senior S&P executive John Chambers told Bloomberg Television: “If any government doesn’t pay its debt on time, the rating of that government goes to D,” Chambers said.
Material from the Associated Press was included in this report.
With videographer David Jacobs
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