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

Hezbollah Chief Says Does Not Want War But Ready for One

VOA's Jerusalem correspondent reports that with an Israeli election looming and Hezbollah's involvement in Syria, neither side appears interested in a wider conflict More

Multimedia VOA SPECIAL REPORT: Despite Danger, Best US Minds Battle Deadly Virus

Scientists at America's premier biological research center race in military confinement to find effective drugs, speedier tests and a safe vaccine amid the deadliest outbreak of Ebola in history More

Kurdish Poet Battles to Defend Language, Culture

Kawa Nemir's work is an example of what he sees as an irreversible cultural and political assertiveness among Kurds in Turkey 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.
Egypt's Suez Canal Dreams Tempered by Continued Unresti
X
Heather Murdock
January 30, 2015 8:00 PM
Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Mobile Infrared Scanners May Help Homeowners Save Energy

Mobile photo scanners have been successfully employed for navigational purposes, such as Google Maps. Now, a group of scientists from the Massachusetts Institute of Technology says the same technology could help homeowners better insulate their houses and save some money. VOA’s George Putic has more.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid