The latest Bloomberg Businessweek suggests that the new Republican-led U.S. House still has some work to do to convince the Obama administration that now is the time to scale back federal spending.
The magazine has this to say about the debate over raising the federal debt ceiling:
The White House, however, has signaled it will resist any cuts beyond the five-year freeze in discretionary, nonsecurity spending Obama proposed last month, which would save $400 billion over the next decade. In addition, the President made clear he would oppose any attempt to scale back entitlements such as Social Security or Medicare. And cuts in programs that make up his new innovation agenda?education, research, and infrastructure spending?aren’t up for discussion.
Republicans, at this point, are singing a different tune:
Failing to raise the debt ceiling would be “a financial disaster,” [House Speaker John] Boehner said on Fox News on Jan. 30. But “if the President’s going to ask us to increase the debt limit, then he’s going to have to be willing to cut up the credit cards.”
Where Boehner would use scissors, some in his party advocate breaking out a chainsaw. Senator Pat Toomey, an antitax freshman from Pennsylvania, has proposed requiring the U.S. to pay interest on the debt before any other federal spending. This would allow the government to avoid raising the debt limit, he claims, and at the same time reduce by one-third the amount of money available in the budget, forcing drastic cuts. Aides stress that Toomey is proposing only a temporary solution to avoid a default on U.S. bonds if there is a political impasse in Congress. “The most irresponsible thing we can do is continue to raise the debt ceiling without reining in spending,” Toomey said in a statement.
