News / USA

Debt, Shutdown Deal Discussed in White House Talks With Republicans

Republican senators walk in the rain back to their bus at the North Portico of the White House in Washington, Oct. 11, 2013.
Republican senators walk in the rain back to their bus at the North Portico of the White House in Washington, Oct. 11, 2013.
Cindy Saine
Senate Republicans met with President Barack Obama at the White House as talks continued in the House of Representatives to hammer out a deal to re-open the federal government and avert a potential default on the nation's debts. The tone has changed on Capitol Hill as real efforts are under way to find agreement.

House Republican leaders are working on a proposal to raise the debt ceiling so the government will have enough money to pay its bills for about six weeks. There are reports now that it may also include a provision to end the government shutdown in exchange for spending cuts by the president.

Democrats were initially disappointed by details of the Republican plan because it appeared that the funding dispute that has shut down most government services this month would continue. Analyst Norm Ornstein of the conservative American Enterprise Institute said Republicans were using the threat of default to press their demands for spending cuts.

“If you just extend the debt ceiling for six weeks, and put in as a condition that there is no flexibility in the Treasury [for arrangements beyond November 22], the signal you are sending is, ‘I am going to use this once again as a method of extortion',” he complained.

Republican senators met with President Obama for about 90 minutes on Friday about the looming deadline to raise the debt ceiling and the ongoing government shutdown, now in its 11th day.

As they boarded buses to return to Capitol Hill, senators did not respond to shouted questions from journalists standing outside the White House.

The government shutdown began on October 1 when House Republicans tried to add a provision derailing Obama’s new health care law - to what would normally be a routine bill extending government services until a budget for the new fiscal year is agreed.

Some Republicans still want to block the Affordable Care Act - the new law on health care reforms known widely as "Obamacare."

“This is our goal right now, to continue the fight on Obamacare," admitted Congressman Raul Labrador who is among those who want to defund Obamacare. "And the best way for us to do that is to separate the two issues [government operations and the nation's debt ceiling] at this time.  Because if not, when they get conflated, then I think people are going to start caving on both issues.”

House Democrats have been frustrated with internal divisions among House Republicans, some of whom want to raise the debt ceiling and reopen the government right away. 

“It is really hard to negotiate with people who are still negotiating among themselves,” said a frustrated Democratic minority leader Nancy Pelosi.

Despite opposition by some House Republicans, there are signs of progress and a more conciliatory tone among both parties in reaching a deal.

Some information for this report provided by Reuters

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Comment Sorting
by: John Powell from: York Pa
October 13, 2013 3:52 PM
I am very concerned in the mist of all these talks will I receive my retirement check 1 Nov ???

by: Iwork@FED from: D.C.
October 11, 2013 11:16 AM
The WAR on seniors VOA won't tell you about:

The Federal Reserve’s zero interest rate policy (ZIRP) of the past half dozen years or so has been a financial act of war on the country’s seniors and, for that matter, on all savers. Under ZIRP, interest rates are artificially lowered through the Fed’s monetary policy popularly known as “QE,” quantitative easing.

First, to allow the Federal government to borrow money at next to nothing in order to maintain its current gargantuan level of spending; and, second, to prop up the Nation’s insolvent banking system, which can continue to engage in all sorts of reckless speculations.

ZIRP is extremely hard on seniors who, for the most part, can no longer rely on earnings through employment income, but have to live on their accumulated wealth. Instead of reaping the rewards for a lifetime of frugal behavior, seniors are being systematically fleeced by the Fed’s action.

ZIRP is actually “class warfare” — not in the Marxist/socialist sense of “labor versus capital,” but in its surreptitious redistribution of wealth from savers (retirees) to the government and politically well-connected financial elites. Moreover, the Fed’s action is turning seniors into a dependent class whose members are no longer able to sustain a reasonable standard of living.

Not only are retirees and savers punished by ZIRP, but the policy is quite destructive to the entire economy since low interest rates discourage savings, which are key to economic growth. Savings provide the means (capital) for production. Without savings, lengthier and more complex production processes will not take place. .

The amount of savings is also crucial for the level of employment and wage rates. Greater savings allows entrepreneurs to hire additional labor plus offer higher wage rates. Policies such as ZIRP have destroyed the savings pool not only in the United States but throughout the Western world, which explains, in part, the persistent high levels of unemployment and stagnating wages. Organized labor should be at the forefront in opposing ZIRP.

ZIRP reduces seniors’ standard of living in another devastating sense. To keep interest rates below market levels, the Fed has to purchase larger and larger amounts of U.S. government bonds. Since the Fed has no assets of its own, it must create money to buy the debt (“monetizing the debt”). This, of course, is inflation, the nasty consequence of which is a rise in the price of consumer goods.

For seniors, not only are they receiving little reward for saving which diminishes their capacity to remain self-sufficient, but the money they do have, because of the Fed’s policy, is worth less and less.
ZIRP and other such measures are the reasons for the creation of a dependent society where reward for hard work and thrift is being systematically undermined for the benefit of a Leviathan state and the financially privileged. The policy has other societal repercussions as younger generations are coming to realize that since prudent behavior will not be rewarded, they will engage in more present-oriented lifestyles. Can there be any doubt that contemporary America’s hedonistic society has resulted, in part, from the punishment of future-oriented behavior.

Less than the abolition of the Fed and a return to a commodity-based monetary order, the solution to the current financial plight of seniors and the economy in general is for the Fed to immediately suspend ZIRP, which would allow interest rates to rise to “normal levels.” Not only would retirees benefit, but the higher rates would induce greater savings, which would eventually spur real and sustainable economic growth.

Unfortunately for seniors, until the Fed’s interest rate policy is reversed, their retirement will be a lot less prosperous than anticipated, as the years of toil and sacrifice will have been for naught. As with so many aspects of the American dream, the golden years are becoming a thing of the past.

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