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

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. More

Video Sudan School Becomes Target of Aerial Attacks

Dropout rate at an all-time high in South Kordofan state because many schools have been destroyed during 3-year civil war More

Tennessee Songbirds Fly Coop Long Before Tornadoes Arrive

Researchers say birds apparently alerted to danger by sounds at frequencies below range of human hearing 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.
US: Response to Sony Hack Will Be Proportionali
X
Aru Pande
December 19, 2014 1:45 AM
The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video US: Response to Sony Hack Will Be Proportional

The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid