Debt ceiling: Obama, congress restart negotiations
WASHINGTON (BDCi) – In a wild turn of events, top congressional Republicans spoke with President Obama Saturday in hopes at finding enough common ground that he would sign a bill arising from negotiations begun by the two parties Saturday.
The U.S. must raise its debt ceiling by August 2nd (Tuesday, midnight) or else it will not be able to borrow to pay all of its bills. The Treasury department will have to report what bills will be paid, and which ones won’t be, which could put us in default.
The Senate majority and minority leaders were both in the spot lights but saying different things. Majority leader Harry Reid (D) said that the two sides were still very far apart in their negotiations, while the minority leader Mitch McConnell (R) gave the media a more positive prediction.
“Our country is not going to default for the first time in its history — that’s not going to happen,” McConnell said.
The current proposal by Senate Democrats would cut $2.2 trillion over 10 years, and was modified by Reid to incorporate some of McConnell’s thoughts, including giving the President authority to raise the debt ceiling in 3 stages through the 2012 election. The current wrangling is believed to be over what conditions must be met at each of those stages in terms of deficit reduction moves.
Even though $2.2 trillion is a staggeringly huge number, it is not nearly enough to cover the estimated debt that will be added in the next 10 years per the non-partisan Congressional Budget Office’s forecast.
On March 18 of this year, the CBO released its annual “re-calculation” of President Obama’s 10-year budget proposal that he released in February. The CBO estimated at that time that Obama’s budget proposal will add $9.5 trillion to the national debt over the next 10 years, if enacted.
The uncertainty of the U.S.’ economy and that of much of Europe has resulted in a degradation of the dollar to the real. Since the end of 2008, the Brazilian real has strengthened by 25% to the dollar. At the close of business Friday, a dollar was worth only 1.549 reais.
This week, President Dilma Rousseff’s government authorized taxes of between 1-25% on dollar short sales in order to reign in speculation which could cause unwanted volatility to export markets.
By Don Weinstein
30 July 2011