National debt limit: Grand bargain eludes, narrow deal likely
The House rejected a measure Tuesday to simply raise the national debt limit, no strings attached. Obama meets Wednesday with GOP lawmakers on fiscal issues. Why a sweeping deal is unlikely.
With President Obama and congressional leaders entering a high-stakes meeting Wednesday, a vote in the US House of Representatives has laid down an important marker: Republicans won't raise the national debt limit without conditions attached to curb future spending.Skip to next paragraph
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On Tuesday, the Republican-led House voted down a measure that would have approved a new round of federal borrowing without such conditions.
Public opinion polls suggest that most Americans feel the same way – exhibiting an aversion to simply raising the US debt limit one more time with no strings attached.
That makes it more likely that Washington will put some sort of restraints on future federal budgets. However, chances are fading for reaching a larger "grand bargain" on fiscal reform – such as a deal that includes tax-revenue increases or entitlement reforms – because both parties have maneuvered into corners that give them little room for maneuvering.
"We know there's not going to be a Medicare and Medicaid deal," because of sharp partisan differences, says Robert Shapiro, a policy consultant who was an economic official during the Clinton administration. "Similarly on taxes, there's no incentive for Republicans, given the current narrative they're trying to establish, to make any concessions."
Republican lawmakers are generally opposed to any net increase in government tax revenue. By contrast, Democrats on the Hill argue that fiscal reforms should ultimately involve reforms that keep tax rates low but also raise additional federal revenue, by limiting things like credits and deductions in the tax code.
Given this political lay of the land, it's unlikely that negotiations to raise the debt ceiling will yeild anything like the $4 trillion in deficit reduction, spread over 10 years, proposed last year by President Obama's bipartisan fiscal commission, say policy analysts. That package included new tax revenue and reforms of health care and Social Security programs.