While countdown nears to an unprecedented national default, Congress members are still dragging out a debate on the debt-ceiling crisis that has not led to any resolve for the past three months.
When the United States hit a statutory debt limit of $14.3 trillion in May, President Barack Obama stated a need to raise the debt ceiling but the GOP wouldn’t jump onboard unless they could hold onto as many spending cuts and a budget amendment plan.
As of now, the White House and congressional leaders are making a last-ditch attempt to reach compromise to avoid said disastrous government default that’s due for Aug. 2nd
As US Treasury experts put it, a default could lead to financial “Armageddon” if both parties fail to increase the national debt limit. This will also result in a loss of America’s AAA credit rating, rising interest rates, a declining dollar, a stock market plunge and the public could even lose out on their social security checks. Both political parties know what is at stake but are failing to reach a bipartisan decision due to their personal and financial agendas regarding the 2012 elections.
Democrats are desperate for tax and revenue increases but the GOP are also vying for their spending cuts- a financial tug- of-war that has been going on for too long.
Fortunately, party leaders are working hard to come up with plans to ward off the financial doomsday. Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner came up with new plans to increase the debt limit after previous rejections from the House and Senate respectively.
According to CNN, Boehner’s plan, which has since been revised, proposed generating a total of $917 billion in savings while initially raising the debt ceiling by $900 billion. He also pledged to match any debt ceiling hike with dollar-for-dollar spending cuts. Meanwhile, Reid’s revised version favors reduced deficits over the next decade by $2.4 trillion that raises the debt ceiling by a similar amount. It includes $1 trillion in savings based on the planned U.S. withdrawals from military engagements in Afghanistan and Iraq.
Ultimately, whatever deal or compromise both political factions come up with, I think the most important thing that Congress should do is listen to the American people. According to the CNN/ORC International poll, 64 percent of respondents to a July survey prefer a deal with a mix of spending cuts and tax increases. It’s probably easier said than done but as President Obama put it “we are running out of time” and Congress needs to come up with a financial plan that is beneficial for the American economy.