Two sides craft debt plans before deadline

Coburn: Short-term deal the ‘only answer’

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The Treasury Department says the government will bump up against its $14.29 trillion borrowing limit Aug. 2, and unless that ceiling is raised, many government payments will have to be suspended and the U.S. government’s top credit rating likely will be downgraded.

The White House has been reluctant to talk about which of the 80 million monthly checks the government issues would be at risk, though Mr. Obama has specifically said he can’t guarantee Social Security benefit checks will be issued.

But even before the Aug. 2 deadline, both the White House and members of Congress said international financial markets could begin to punish the U.S. by not buying U.S. Treasury bonds, by downgrading the U.S. government’s top-credit rating, or both.

Mr. Daley said the government’s creditworthiness has already suffered “enormous damage” during the months of stalemate.

In early trading Monday morning, Asian markets were down slightly, while gold was fetching record prices.

With no deal in sight, both sides have tried to insulate themselves from blame.

Democrats said that while they think Mr. Boehner is negotiating in good faith, some of his fellow House Republicans would prefer to see the government fail to raise the debt ceiling at all rather than have any taxes raised.

The GOP, though, repeatedly points to the plan the House passed last week to tie a debt-ceiling increase to deep spending reductions and a promise that a balanced budget amendment to the Constitution be proposed to the states for ratification.

Democrats in the Senate voted to table that plan Friday, but they have yet to produce a budget or a debt plan of their own.

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