ABC News: Culture of Debt? As Congress Scrambles to Avoid Government Default, Some U.S. Leaders Have Financial Difficulties Too

By JOHN R. PARKINSON
June 30, 2011
The national debt is currently approaching $14.3 trillion, or almost $130,000 per U.S. taxpayer, and while Congress scrambles to prevent the government from defaulting on its debt obligations, some of the country’s top leaders are having difficulty balancing their own finances.

Two days after Republicans rode a tidal wave of anti-spending, anti-debt sentiment to the House majority, House Speaker John Boehner, R-Ohio, told ABC News’ Diane Sawyer that he did not have any personal debt. No outstanding mortgage, no maxed-out credit cards, no car loans. Nothing.

“Germans. You know, we [Boehners] — we’re savers, we’re not spenders,” Boehner explained to Sawyer Nov. 4. “Debt is not something that has ever made me comfortable, and this national debt makes me very uncomfortable.”

Boehner’s financial disclosure statement even backs him up: zero liabilities.

Some fiscal hawks in Washington say that lawmakers should follow the everyday American’s lead and pass a budget based on what the government makes in revenue.

“Families do it every day. A husband earns $40,000. A wife earns $40,000. Their total family income is $80,000. That’s their budget. That’s what they can afford to spend. American families figure out how to live within their means,” Sen. Ron Johnson, R-Wis., said Tuesday on the Senate floor. “The federal government should be no different. A budget is a number. We should first pick one number, and then a set of numbers, that won’t let America go bankrupt.”

House Majority Leader Eric Cantor, R-Va., said that at the end of July — mere days before the Treasury Department’s Aug. 2 deadline to raise the debt ceiling — the House would consider a balanced budget amendment, which would amend the Constitution to require that total spending for any fiscal year not exceed total receipts.

“We are about trying to save the taxpayers money and to change the culture here in Washington,” Cantor, told reporters May 11. “We believe that what we’re about reflects a commonsense nature of the American people. They understand that we can’t keep spending money we don’t have.”

But consumer credit reporting agency Equifax reports that although total consumer debt has declined since 2008, many Americans are still spending money they don’t have. The agency says that 54 million American households still owe more than $800 billion in debt to credit card companies alone, irrespective of other debts such as mortgages, car loans or student loans.

And they’re not alone.

While the speaker and his Republican colleagues work to cut spending and reverse Washington’s culture of debt, Boehner’s squeaky-clean debt record stands apart from some of the country’s most fiscally conservative lawmakers (and some Democrats), who are deep in the hole themselves with personal debt valued in the hundreds of thousands of dollars.

Even some of the presidential candidates seeking the Republican nomination in 2012 have drawn criticism for spending money they do not have, racking up personal debt in the process.

Fox News: Senate Considers Nixing Fourth of July Recess Over Debt Talks

Republican senators, led by a band of upstart GOP freshmen, pushed Wednesday for the elimination of the upcoming, week-long Fourth of July recess, this as President Obama chided members, as well, for not staying in town to forge a compromise on deficit reduction. Numerous aides from both sides of the aisle have they would be surprised if the effort was not successful.

The GOP group went even further saying they will object to the chamber moving to any measure that does not relate to deficit and debt reduction.

“Our country is going bankrupt. We shouldn’t be going out on a holiday,” said Sen. Ron Johnson, R-Wisc, who led the charge to oppose the break. “We’re here today saying we should get back in session, but not just to be in session. We need to come back in session in the United States Senate and start addressing the problem. And until we do that, my intention…will be to continue to object and continue to withhold my consent from doing business as usual in Washington.”

One after the other, the freshmen told reporters how disappointed they were after their first six months in Washington, this as the president and GOP lawmakers are deadlocked on a deficit reduction plan ahead of an early August vote to increase the nation’s $14.3 trillion debt ceiling.

Each blasted the chamber’s Democratic leaders, as well as the president for what they see as a lack of leadership.

“Never in my wildest dreams, no matter how pessimistic I was about the direction of our country, did I ever imagine seeing virtually no work going whatsoever into addressing the pressing issues of our nation,” blasted Marco Rubio of Florida. “I’m deeply disappointed.”

“Since I’ve been here for six months, I’m disappointed. We have not had one minute of one hearing devoted to the debt ceiling,” Kentucky’s Ron Paul decried, saying “week after week” the Senate is debating measures “not of grave importance to us,” adding, “We lack leadership. We have a president who is not leading. They are running from this debate.”

“Mr. President, where’s your plan?” asked Sen. Kelly Ayotte, R-N.H.

But a senior Senate Democratic leadership aide took issue with the attacks, saying GOP “obstructionism” was to blame. “We have tried to pass small business jobs measures, patent reform, other measures that will bring in the jobs. Are they just clueless? Each time, they were more worried about trying to get ideological measures attached to the bills, and the whole thing fell apart. It’s shameful and disingenuous to say we haven’t been leading.”

The revenue issue is a particularly difficult one for Republicans, as most have signed a pledge that necessitates an equal reduction in tax rates for every tax loophole that is closed or subsidy that is eliminated. Deficit reduction is not to be the aim of any tax expenditure elimination.

But fissures are showing in the GOP courtesy of a recent vote to repeal the subsidies for ethanol blending with the additional revenue going to reduce the tide of red ink. The effort was led by fiscal hawk Sen. Tom Coburn, R-Okla.

This week, however, Republicans who supported the measure, including GOP leader Mitch McConnell of Kentucky, have said that the elimination of subsidies should come further down the road in the context of overall tax code reform.

Democrats, however, made clear Wednesday that revenue had to be included in any deficit reduction package, else supporters of a debt ceiling hike could find themselves short on votes.

So, the game of chicken continues, and where how it turns out is anyone’s guess.
Read more: http://politics.blogs.foxnews.com/2011/06/29/senate-considers-nixing-fourth-july-recess#ixzz1QlcQnlXc

Leader Telegram: Senate, Obama not serious about budget

Editor’s note: Sen. Ron Johnson, R-Wis., spoke on the Senate floor Tuesday. Here is a condensed version of his remarks.

I’ve been here for almost six months, but I’ve been carefully watching Washington for more than 32 years while operating my manufacturing business in Oshkosh – watching how increasingly broken Washington has become over the years.

Nothing I’ve seen in the last six months changes that evaluation.

Washington is broken and America is going broke. Our economy is in a coma; people are suffering.

America hungers for leadership, and it it’s not getting any – not from President Barack Obama, not from the U.S. Senate.

Under Democratic leadership, it has been more than two years since the Senate has passed a budget. America is going bankrupt, and the Senate refuses to pass a budget.

The president’s budget – the one he presented several months ago to great fanfare, remember that? It was 4 1/4 inches thick, 2,400 pages long. Who knows how many thousands of man hours that document took to produce? It was going to be the solution to our fiscal problems.

But it was so unserious, it would have added more than $12 trillion to our nation’s debt. It was so unserious that when it was voted on in the Senate, it lost by a vote of 0 to 97. It was so unserious that not a single member of the president’s own party voted for it.

Instead of rolling up his sleeves and personally tackling the number one problem facing this nation right from the beginning, President Obama delegated his role in sporadic negotiations to Vice President Joe Biden. Now that those talks have broken down, the president is finally getting personally involved in this process.

But what kind of process is this – a few people, talking behind closed doors, far from the view of the American public? Is that the process that is going to decide the fate of America’s financial situation, of our financial future? Is this how our government is supposed to work? Of course not.

Unfortunately, this has become business as usual in Washington.

As a manufacturer, I know if the process is bad, the product will be bad. Business as usual in Washington is a bad process. It is bankrupting America. It must stop.

The Senate needs to pass a budget. It shouldn’t be that difficult. Families do it every day. A husband earns $40,000. A wife earns $40,000. Their total family income is $80,000. That’s their budget. That’s what they can afford to spend. American families figure out how to live within their means.

The federal government should be no different. A budget is a number. We should first pick one number, and then a set of numbers, that won’t let America go bankrupt.

So let me start the process by throwing out a number: $2.6 trillion. This is $800 billion more than we spent just 10 years ago. That is the amount that President Obama, in his budget, says the federal government will receive in revenue next year. If we only spent that amount of money, we would be living within our means. What a concept, huh?

If we want to spend more than $2.6 trillion, members of Congress and this administration should go before congressional committees and openly justify what they want to spend, how much they want to borrow, and how much of our children’s future they are willing to mortgage.

The American people deserve to be told the truth.

Johnson, of Oshkosh, is serving his first term in the U.S. Senate.

Full article.

Denver Post: Obama swipes at GOP leaders as debt discord goes public

WASHINGTON — President Barack Obama sharply intensified pressure on congressional Republicans in negotiations over the federal debt, depicting GOP leaders as supporting tax breaks for jet-setting corporate executives at the expense of college scholarships and medical research.

Obama’s decision to chastise GOP leaders in an hour-long televised news conference Wednesday moved the debt talks out of the realm of closed-door Washington meetings and into full public view, setting off a high-stakes effort to mobilize public opinion.

Obama and Republicans have been locked for more than a month in a confrontation over raising the nation’s borrowing limit. Republicans have insisted they will not approve the increase unless

Obama and congressional Democrats agree to reduce the debt in the long term. But last week, top Republicans pulled out of discussions with Vice President Joe Biden, objecting to a White House demand that any deal include additional revenue as well as spending cuts.

The news conference represented a rare use of the presidential megaphone for Obama as he defended his position. In the past, the president has been prone to delivering lengthy answers in a professorial tone, relying on abstract ideas. By contrast, Obama on Wednesday laid out his arguments in simple, everyday terms, echoing an ex-president he has been studying: Ronald Reagan.

“These are bills that Congress ran up,” Obama said in expressing why the U.S. mustn’t default on its debt obligations. “They took the vacation. They bought the car. Now they’re saying, ‘Maybe we don’t have to pay.’ ”

Obama chided lawmakers for taking frequent recesses instead of staying in Washington to finish work on the debt question, going so far as to add that his two young daughters exhibit more diligence in doing their homework than Congress has shown.

Houses may shun recess

“They don’t wait until the night before,” he said. “They’re not pulling all-nighters. Congress can do the same thing.”

Reacting to the criticism, senators considered abandoning a week-long July Fourth recess, and House leaders said they would stay in session until negotiations were finished.

But Republican leaders offered scant hope of a shift on the issue of tax revenues.

“The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House,” said House Speaker John Boehner, R-Ohio.

In the Senate, Republicans began a push to amend the Constitution to require a balanced budget, insisting the government cannot get out from under crushing debt without one.

Senate Minority Leader Mitch McConnell, R-Ky., characterized the amendment as a “good first step” toward achieving long-term budget stability. “We think it’s pretty clear, regardless of what we’re able to negotiate here in the short term, that we should put the federal government in this kind of fiscal straitjacket so that we do not get in this position again,” he said.

Among the GOP rank and file, however, some indicated they would consider new revenue sources, posing a potential challenge to party unity.

“I’m not too sympathetic to all these jets myself, so I’d be willing to consider that,” said Sen. Jeff Sessions of Alabama, the top Republican on the Budget Committee.

Jet tax break criticized

Others said it would depend on which loophole was being eliminated. “I’m willing to take a look at the special deals,” said Sen. Ron Johnson, R-Wis. “I would love to do away with special tax breaks, but not legitimate business deductions.”

Several times in the news conference, Obama cited the high-profile tax break offered to owners of corporate jets, even though it would bring in only an estimated $3 billion over 10 years. Other Democratic proposals would net $41 billion over 10 years by tightening oil and gas tax credits and $21 billion by eliminating credits for hedge-fund managers.

The largest Democratic tax proposal would limit the deductions that may be claimed by those earning more than $500,000 a year. In all, the White House said earlier this year that it wants $760 billion in new revenue over 10 years.

With the Fourth of July weekend coming up, the Obama administration will send top officials to appear on television to echo the president’s message and build a consensus behind what Obama calls a “balanced” approach to deficit reduction. Gene Sperling, the president’s top economic adviser, will be one of those leading the push.

The government reached the limit of its borrowing ability in May, and federal officials warn that maneuvers to continue paying the nation’s bills will be exhausted by Aug. 2, risking a default on federal obligations.

Underscoring the concerns, the International Monetary Fund warned in a report Wednesday that failure by Congress to raise the borrowing limit could result in “a severe shock to the economy and world financial markets.”

Nonetheless, many Republicans regard the administration’s warnings as a scare tactic and refuse to raise the debt ceiling without major reductions in the nation’s deficit, chiefly through spending cuts.

The Washington Post contributed to this report.

Read more: Obama swipes at GOP leaders as debt discord goes public – The Denver Post

The Hill: Sessions threatens to block Senate holiday — again

Senate Budget Committee ranking member Jeff Sessions (R-Ala.) on Wednesday once again threatened to derail the Senate’s planned recess in order to protest Democrats’ lack of a budget plan.

The Senate is currently scheduled to go out on a weeklong break for the Fourth of July holiday starting on Thursday.

Washington Post: International Monetary Fund urges US lawmakers to raise $14.3T borrowing limit, cut deficits

The International Monetary Fund warned U.S. lawmakers Wednesday that a failure to raise the nation’s borrowing limit would pose serious risks to the global economy and financial markets.

The U.S. last month reached its $14.3 trillion borrowing limit. The U.S. Treasury has said that it can keep the country operating for a couple months by employing various bookkeeping maneuvers. But if Congress doesn’t raise the borrowing limit by Aug. 2, Treasury Secretary Timothy Geithner has said the country will default on its debt.

John Lipsky, acting managing director of the IMF, said a default “would have very serious and far-reaching consequences.” It would rattle markets and send interest rates soaring, making mortgages and other consumer loans more expensive. Lipsky expressed confidence that Congress will reach a deal before that happens.

A sharp divide among lawmakers over how to rein in the federal budget deficit has kept Congress from raising the borrowing limit. Republicans want President Barack Obama and Democrats to agree on spending cuts equal to any increase in the borrowing limit. Democrats say the deficit-reduction deal must also include some tax increases.

The IMF said enacting steep spending cuts or tax increases too quickly could hamper the U.S. recovery. It advocated raising the borrowing limit and implementing a long-term deficit-reduction strategy.

President Obama on Wednesday said that eliminating selected tax breaks for oil companies and the super-wealthy must be part of any deficit reduction plan. He also said that a bipartisan agreement is possible to cut deficits, raise the government’s debt limit and avert a threatened financial crisis.

Obama said both Democrats and Republicans must be prepared to “take on their sacred cows” as part of the deficit-reduction negotiations.

Republicans say they will not support any proposal that raises taxes.

Geithner, meanwhile, strongly criticized a Republican proposal that would prioritize interest payments on the nation’s debt and cut spending rather than raise the borrowing limit.

Geithner said in a letter addressed to Sen. Jim DeMint, a South Carolina Republican, that the idea is “a radical and deeply irresponsible departure” from previous practices by presidents of both parties. The letter was copied to 16 other Senate Republicans, including Minority Leader Mitch McConnell.

In a second letter to Sen. Ron Johnson, a Republican from Wisconsin, Geithner also criticized a separate Republican proposal to develop contingency plans in the event the debt ceiling isn’t raised. Geithner has said that there is no alternative to raising the debt ceiling.

Failure to do so would raise interest rates and therefore the government’s borrowing costs, Geithner said, and would worsen budget deficits.

The U.S. economy will grow this year and next but at a weak pace, the IMF forecasts. The fund projects the economy will expand 2.5 percent this year and 2.75 percent in 2012. Consumers are still paying off debts, which will reduce their buying power. And budget cuts at the federal, state and local levels will also reduce demand.

Lipsky noted that the fund’s forecast for this year included an expectation that growth would pick up in the second half of this year, as gas prices have retreated from their peak last month of nearly $4 a gallon. And disruptions in auto manufacturing stemming from Japan’s March 11 earthquake, which reduced the availability of key parts, is also likely to fade.

The IMF’s forecast is below recent projections by the Federal Reserve. The Fed expects the economy will grow by as much as 3.3 percent next year. Many private forecasters, however, are more pessimistic and closer to the IMF’s view.

The IMF’s warnings on the U.S. deficits echo recent statements from major credit rating agencies such as Standard & Poor’s and Moody’s. They have warned that they may have to downgrade the United States’ credit rating if a deal on the debt ceiling isn’t reached and progress toward cutting the deficits isn’t made.

Such a downgrade would have “significant global repercussions,” the IMF said, given “the central role of U.S. Treasury bonds in world financial markets.”

The budget deficit is projected to reach $1.4 trillion this year, above last year’s $1.29 trillion gap and just below a record $1.41 trillion reached in 2009.

The IMF has 187 member nations and lends money to countries with troubled finances. It also regularly reviews major national economies to look for signs of trouble that could impact the world economy.

Full article.