Both Sides Entrenched As U.S. Budget, Debt Fights Loom

Both Sides Entrenched As U.S. Budget, Debt Fights Loom

WASHINGTON (AFP) – President Barack Obama is facing the prospect of a fiscal fight with Congress, with both sides having three weeks to break funding impasses or risk government default.

Two crucial votes are on the horizon for the divided and gridlocked Congress, including approval of a federal budget for fiscal year 2014, which begins October 1.

Complicating matters, conservative Republicans are itching to use the upcoming showdown about raising the government’s $16.7 trillion debt limit as a way to defund Obama’s national health care law.

Lawmakers are on recess until September 9, at which point they will have just nine legislative days to hammer out an agreement on federal spending.

Republicans are calling for greater budget austerity and their leader in the House, Speaker John Boehner, has urged his caucus to hold firm on its demands as they enter negotiations with Obama’s Democrats.

Should the two sides fail to strike a deal, parts of the government will be forced into shutdown, triggering a fiscal domino effect that could send markets reeling.

A more contentious battle looms. With the government projected to hit its borrowing limit by mid-October, the two sides must reach agreement on raising that cap or risk a potentially calamitous default.

Lawmakers have long used the debt ceiling as leverage in budget negotiations. But Boehner, at a fund-raiser Monday in Idaho, raised the specter of a bitter battle in the weeks ahead, repeating his aim not to raise the borrowing limit unless his party gets an equal amount in spending cuts.

“It may be unfair, but what I’m trying to do here is to leverage the political process to produce more change than what it would produce if left to its own devices,” Boehner said.

“We’re going to have a whale of a fight.”

The two sides are far from agreement, but Obama has insisted he will not negotiate over the U.S. responsibility to pay its bills.

Should they fail to reach a deal, the crisis could ding the country’s gold-plated credit rating, which suffered a hit in 2011 when Republicans and Obama brought their disastrous fiscal negotiations to the brink before coming to terms.

Despite the president’s pre-occupation with Syria, top Obama aides met at the White House Thursday with Republican lawmakers like Senator Ron Johnson, who publicly sought to defuse the potential fiscal time bomb.

“I appreciate the fact that we are talking, that’s a good sign,” Johnson told MSNBC.

“We need to take government shut down… off the table and we’ve got to actually start working toward real solutions.”

Many fellow Republicans, though, have sought to use the fiscal debates as an opportunity to push one of their top priorities: defunding the president’s national health care law.

Efforts in the House and Senate to defund what Republicans have nicknamed Obamacare have gained some steam, but Republican leaders in both chambers are not signing on.

The fiscal battles illustrate the inability of the American political system to permanently solve the fiscal challenges facing the country.

“There are no new ideas, no good ideas. Using the debt limit as leverage does not make policy sense,” Richard Kogan, a former House Budget Committee Democratic staffer and current specialist at the Center on Budget and Policy Priorities, told AFP.

“The normal political process is not well-suited to solving (problems) in the United States, rather it’s well suited to gridlock.”

Americans endured a government shutdown for three weeks in late 1995, after negotiations failed between president Bill Clinton and Republicans who controlled Congress.

Democrats seem appalled by the strategy of brinkmanship being exhibited by today’s Republicans.

Obama slammed the shutdown threat as “bad for the economy,” and described Republican efforts to once more kill Obamacare as “their last gasp” on the issue.

Many in Congress acknowledge there is not enough time to pass a budget in nine days, and that a stop-gap measure, known as a continuing resolution, is a likely temporary solution to keep government funded for a few more months.

But such a solution could yield significant collateral damage: postponement of urgent issues, primarily the bipartisan push for comprehensive immigration reform.

Photo Credit: AFP/Brendan Smialowski

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