News / USA

Sharp Party Differences Over Taxes Define US Debt Debate

President Barack Obama, flanked by House Speaker John Boehner, left, and Senate Majority Leader Harry Reid, meets with Congressional leadership in the Cabinet Room of the White House in Washington, July 7, 2011
President Barack Obama, flanked by House Speaker John Boehner, left, and Senate Majority Leader Harry Reid, meets with Congressional leadership in the Cabinet Room of the White House in Washington, July 7, 2011

In Washington, efforts continue to break an impasse over raising the nation’s debt limit and avoid the United States defaulting on its financial obligations for the first time in history.  The dispute over allowing the government to borrow more money to meet its obligations pits President Barack Obama and his Democratic allies in Congress against the Republican opposition, which took control of the House of Representatives in last year’s congressional elections.

This latest test for divided government in the United States has enormous implications, not just domestically, but around the world.

Obama administration officials warn that the United States will default on its existing debt obligations unless Congress acts to raise the $14.3 trillion debt ceiling by August 2.

A default would have a huge impact on the U.S. economy and would also cause a ripple effect in international markets, says financial analyst Greg McBride.

“This is something we are all going to feel.  Financial markets would roll over and it is something we would feel in our retirement accounts and college savings accounts.  But perhaps even worse is that the flow of credit could come to a screeching halt,” McBride said.

Both sides in the debt debate say they want to avoid a default.  But getting to an agreement is proving difficult in large part because of differences over raising taxes.

President Obama and his Democratic allies in Congress are willing to agree to huge cuts in government spending, but only if Republicans give up their opposition to raising taxes on the wealthiest Americans as part of any deal to agree to raise the debt limit.

Mr. Obama faces a tough re-election campaign next year given the weak domestic economy and analysts say he is trying to appeal to centrist voters with his stance on the debt negotiations, voters he won in 2008 and voters he will need again to prevail in next year’s election.

“We can defy the expectations that we are always thinking in terms of short-term politics and the next election, and every once in a while we break out of that and we do what is right for the country,” he said.

Republicans are sticking to their no-tax increase pledge because they believe they have the upper hand in this political dispute, pointing to public-opinion polls that show Americans want to cut spending and reduce the budget deficit.

House Speaker John Boehner is also under pressure from fellow Republicans elected to Congress last year with help from Tea Party activists to uphold pledges to oppose tax increases and to dramatically reduce the size of the federal government.

“Our disagreement is over the idea of raising taxes on the very people that we are asking to create jobs in our country.  The American people will not accept and the House cannot pass a bill that raises taxes on job creators,” Boehner said.

The debate over whether to emphasize budget cuts or tax increases to solve budget problems is not new and lawmakers generally found a way to reach a compromise in past disputes.  But this time the differences are stark, says Washington-based analyst Stuart Rothenberg.

“Republicans and Democrats have a very different view.  For Republicans, it is all about cutting taxes and smaller government.  The Democrats say, 'Yes, we need to restrain some of our spending, we need to cut some of the deficit, but we also need to raise additional revenue,' and there is a big gap between the parties on this,” Rothenberg said.

President Obama has also indicated he is willing to consider savings for popular government programs like the Social Security pension system and the Medicare program that provides low-cost health care for the elderly.

Democrats have long sought to protect both programs from Republican cost-cutting moves, and MSNBC political analyst Richard Wolffe says it shows Mr. Obama is willing to upset his own party in the search for a long-term solution to reducing the debt.  Wolffe spoke on VOA’s Issues in the News program.

“The challenge for this president is that he has got to try and keep enough of his own [Democratic] votes together.  But really what he wants to do is reshape the budget and reshape the political landscape,” Wolffe said.

Economic and political experts warn that failure to raise the debt ceiling could jeopardize the tepid economic recovery, which in turn could be disastrous for President Obama’s re-election hopes next year.

Analyst Stuart Rothenberg says the political stakes for Mr. Obama are huge.

“And consumer sentiment is down and that is a significant problem because it reflects the public’s sense of fear, concern, worry, even anger at the president and the politicians’ inability to do anything,” Rothenberg said.

Complicating the debate in Washington is the fact that polls show the American public is sharply divided on raising the debt ceiling.  Surveys show Republican voters tend to oppose or doubt the need to raise the borrowing limit, while Democratic voters tend to support the idea, fearing a negative economic impact if the Congress fails to act.

You May Like

Uganda Court Annuls Anti-Gay Law

Court says law was passed in parliament without enough members present for a full quorum More

Multimedia Thailand Makes Efforts to Improve Conditions for Migrant Laborers

In Thailand, its not uncommon for parents to bring their children to work; one company, in-collaboration with other organizations, address safety concerns More

In Indonesia, Jihad Video Raises Concern

Video calls on Indonesians to join Islamic State of Iraq and the Levant, ISIL More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
In Thailand, Some Efforts to Improve Conditions For Migrant Laborersi
X
Steve Herman
August 01, 2014 6:22 PM
Thailand has been facing increasing international scrutiny as a hub of human trafficking and slave labor. Some of the kingdom’s companies are striving to improve working conditions, especially for the millions of migrant laborers from surrounding countries. VOA Correspondent Steve Herman in Bangkok takes a look at one initiative for children at construction sites
Video

Video In Thailand, Some Efforts to Improve Conditions For Migrant Laborers

Thailand has been facing increasing international scrutiny as a hub of human trafficking and slave labor. Some of the kingdom’s companies are striving to improve working conditions, especially for the millions of migrant laborers from surrounding countries. VOA Correspondent Steve Herman in Bangkok takes a look at one initiative for children at construction sites
Video

Video Public Raises its Voice on Power Plant Pollution

In the United States, proposed rules to cut pollution from the nation’s 600 coal-fired power plants are generating a heated debate. The U.S. Environmental Protection Agency, charged with writing and implementing the plan, has already received 300,000 written comments. As VOA’s Rosanne Skirble reports, another 1,600 people are lining up this week at EPA headquarters and at satellite offices around the country to give their testimony in person.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video China Investigates Powerful Former Security Chief

The public in China is welcoming the Communist Party's decision to investigate one of the country's once most powerful politicians, former domestic security chief Zhou Yongkang. Analysts say the move by President Xi Jinping is not only an effort to win more support for the party, but an essential step to furthering much needed economic reforms and removing those who would stand in the way of change. VOA's Bill Ide has more from Beijing.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.

AppleAndroid