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Posted : 2011-05-08 15:47
Updated : 2011-05-08 15:47

Debt-limit deal framework in place

By Dale McFeatters

In Washington's current political climate, optimism is almost certainly misplaced ― but still there's reason to hope that the White House and both houses of Congress can reach a deal on raising the federal debt limit well before the Aug. 2 drop-dead date.

And if the Obama administration, House Republicans and Senate Democrats can pull that off, there's some hope that they may also agree down the road on the fiscal 2012 budget. Last year, the Democratic Congress failed to agree on a budget, which led, after Republicans took control of the House, to a seemingly nonstop battle over a series of temporary funding measures for the country.

The White House point man on negotiations is Vice President Joe Biden. He ― along with Treasury Secretary Tim Geithner, budget director Jacob Lew and White House Economic Council director Gene Sperling ― have begun meeting with six lawmakers with key budget posts. The group includes House Republican leader Eric Cantor.

According to The Wall Street Journal, the outlines of a deal to raise the debt ceiling are on the table. It would include strict deficit targets and enough spending cuts to mollify the Republicans.

The deal would set mandatory spending limits on government programs that must be approved yearly and spending limits on multiyear programs, like farm subsidies, food stamps, students loans, housing subsidies.

The Journal said the two sides agreed to put off the contentious issues of reforming Medicare and Medicaid until after the 2012 elections. Here, too, was progress of a sort. House Ways and Means Committee chairman Dave Camp said that he was not wedded to the GOP plan to turn Medicare into a voucher system, that he was open to other alternatives for reform.

In the unlikely event vouchers get through the Senate, they would face a certain veto from President Barack Obama.

The goal of enforceable spending limits is to get the deficit below 3 percent of the gross domestic product by 2015. It is now close to 10 percent.

The debt ceiling, now nearly $14.3 trillion, must be raised periodically so the government can keep on borrowing to pay its bills. Treasury says that line of credit will run out Aug. 2, when the department will have to delay paying Social Security, Medicare and interest on government bonds.

There is some urgency in reaching a deal because just the whiff of default could drive up interest rates and stall the recovery. As Samuel Johnson said of the prospect of being hanged, it does focus the mind.

Dale McFeatters is an editorial writer of Scripps Howard News Service (www.scrippsnews.com).

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