Debt-ceiling, Ryan bill, linked by White House

Neil Munro | White House Correspondent

White House officials are using the growing debate over Wisconsin Rep. Paul Ryan’s budget plan to minimize spending-concessions during the upcoming congressional debate over the national debt-ceiling, and to highlight the President’s claim to be a fiscal moderate.

The ceiling must be raised from its current level of $14,300 billion by May 16 to fund annual deficit spending of more than $1,500 billion. GOP members say they want curbs on future spending in exchange for their vote to raise the debt ceiling. Curbs must be “really, really big,” House Speaker John Boehner said in a Fox News interview April 11.

White House officials are trying to head off any concessions, but they’re not threatening to veto the legislation if it includes spending-curbs. “We support a clean piece of legislation … [because] concurrently, the president will demonstrate his commitment, again, to deficit reduction” in debate over the Ryan budget plan, White House spokesman Jay Carney said today.

Many Democrats oppose further fiscal concessions to Republicans, but any fight that yields a compromise between congressional Democrats and Republicans also allows the President to portray himself as a level-headed, even-handed, problem solver. This stance can help the President appeal to critical swing-voters in the 2012 election.

Since 2008, those swing-voters have sided with the GOP in numerous elections that have switched Senate seats, state houses, governorships and the House of Representatives from the Democratic control to GOP control.

The President’s next major budget-speech will come Wednesday, when he is slated to give an address at George Washington University. It “will very clearly lay out his vision for deficit reduction… address the long-term drivers of our debt [and call] for everyone to share in the burden of bringing our financial house back in order,” Carney said.

During the press conference, Carney said numerous times that the speech would call “balance.” This is stoking concern that the President will push for tax increases, especially on companies and employers. “I would not be surprised if he focused on a lot more on the tax side,” rather than spending cuts, said Martin Regalia, senior vice president for economic and tax policy at the United States Chamber of Commerce.

One likely target for Democrats are the tax rules governing the oil and gas industries. The industry gets about $4 billion back from Uncle Sam every year under tax rules very similar to those governing other small and large companies, such as Microsoft, Starbucks and General Motors, said Stephen Comstock, manager of tax policy at the D.C.-based American Petroleum Institute, which represents oil ad gas industries. If the federal government denied the oil and gas industry’s use of those standard oil-breaks, it would shrink exploration, cut jobs, increase reliance on foreign energy and cut overall tax-revenues, he said. ““What is it about our jobs that people don’t want them in the United States?…. we pay over $85 million per a day into the U.S. government,” he said.

Currently, the U.S federal debt is growing at least $3 billion per week.

Democrats can also likely to call for increased personal income-taxes, which would hit company-owners hard, said Regalia.

In his press briefing today, Carney also tried to head off any concessions by emphasizing the economic harm that would be caused by a failure to lift the debt-ceiling. Failure to raise the debt-ceiling would have “armageddon-like,” “catastrophic” and “devastating” effects on the economy,” he said.

However, this threat of harm is muted because the U.S. Treasury has many short-term options for heading off a crisis. For example, it can use emergency funds to continue funding the estimated $1.600 billion annual deficit for several weeks. These options are costly, but they muddle the deadline. The just-passed agreement on the 2011 budget, however, was made more dramatic and easier to reach, because Democrats and Republicans faced a drop-deadline of Friday.

Regalia said he expected the debt-ceiling debate to include a variety of budget issues, but added that non-budgetary issues should be kept out of the debate, because the . Those non-budget issues, he said, include social-issues and language that would hobble the Environmental Protection Agency.

However, other Republican-affiliated advocates say the EPA’s pending rules on carbon will hobble numerous U.S. companies, and that many federal social-issue programs spur increased federal spending on welfare and other accounts. That money is often granted to Democratic-affiliated organizations, including Planned Parenthood, which then donate heavily to Democratic candidates, say conservatives.

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