Photo: The White House/Pete Souz
President Barack Obama yesterday took charge of the negotiations over raising the debt ceiling and reducing the federal budget deficit.Both parties have drawn lines in the sand on deficit reduction, with Democrats demanding tax increases and/or the elimination of corporate subsidies and Republicans calling both unacceptable.
The White House yesterday offered a plan to raise $600 billion through tax hikes and the elimination of various subsidies. This drew an immediate and negative response from Republicans, who have been saying for a week that any deal that includes new taxes (or whatever euphemism is employed) simply will not pass.
Among the few things both side agree on, is that an increase in the debt ceiling must be offset by cuts to the federal deficit equal to (or greater than) the increase in the borrowing limit.
The negotiations, led until last week by Vice President Joe Biden, managed to find about $1 trillion in agreed spending cuts, but broke down when Republicans walked out over any discussion of tax increases.
The White House has set a target of $2 trillion in deficit reduction to prevent an even more politically charged vote on the debt ceiling before the 2012 Presidential election.
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