Congress and the White House are accelerating their budget and debt limit negotiations amid growing concerns about the economic recovery and the possibility that a political stalemate could trigger turmoil in the financial markets.
After only one meeting so far this month, the bipartisan talks chaired by Vice President Joe Biden are scheduled for three sessions this week, starting today. Some officials have suggested that these talks, involving key lawmakers and presidential aides, could reach an agreement well before Aug. 2, when the Treasury says it will no longer be able to avoid default under the current debt limit.
But fundamental differences between the two parties remain, particularly over the question of additional tax revenue. With huge deficits projected for the coming decade, The Concord Coalition has urged elected officials to keep all options on the table.
Last Wednesday Fitch Ratings, echoing concerns voiced recently by two other ratings agencies, threatened to downgrade the U.S. government’s credit rating if Congress fails to increase the debt ceiling by early August.
In addition to the Biden talks, a small bipartisan group of senators are continuing their promising work on a comprehensive, long-term fiscal plan, briefing about 20 Senate colleagues last week on possible proposals.
Elected officials and others worry over weakening job growth and a survey released by the Federal Reserve on Wednesday that pointed to higher energy prices, severe weather and other challenges to the economic recovery. Fed Chairman Ben Bernanke last week reiterated his view that putting government finances on a sustainable long-term path could provide immediate economic benefits.
External links:
Federal Reserve Chairman Bernanke: U.S. Economic Outlook
Federal Reserve “Beige Book” Summary
CBO Monthly Budget Review
White House Campaign to Cut Waste
