January 6th, 2013
01:32 PM ET
2 years ago

Lawmakers dig in on debt ceiling debate

(CNN) – The eleventh-hour compromise that avoided the fiscal cliff cannot be repeated when it comes time to raise the nation's debt ceiling, top lawmakers agreed Sunday.

But whether Republicans and Democrats can agree on how to raise the debt ceiling - specifically, whether or not to pair the increase with spending cuts - remains to be seen.

Speaking on CNN, Sen. Dick Durbin, the No. 2 Democrat in the Senate, said spending cuts and tax reform are needed as part of a balanced plan to further reduce the federal deficit, but that linking them to a routine increase in the debt ceiling was a perilous proposal from Republicans.

"The debt ceiling is something that we should put behind us in a hurry," Durbin told CNN chief political correspondent Candy Crowley on "State of the Union."

The country's borrowing has actually already passed its legal limit - currently $16.394 trillion. As a result, the Treasury can't borrow any more money in the markets, so it has begun to use "extraordinary measures" to ensure that the government can continue to pay all its bills in full and on time. But those measures can only buy about two months' grace.

If the ceiling isn't raised by late February or early March, the United States runs the risk of defaulting on its obligations, because the Treasury would no longer have enough money available to pay all the country's bills.

Republicans' vow to demand spending cuts in an amount equal to the debt limit increase "sounds like a bargain," Durbin said, but he added that it placed a caveat on negotiations that could lead to the nation defaulting on its debt.

"What I'm saying is the president should not have one of these last-minute showdowns over the debt ceiling, but we should speak in honest and I think complete terms about dealing with this deficit," Durbin said. "It truly is a challenge we haven't faced as much as we should."

Durbin's colleague, Republican Sen. Lindsey Graham, said he, too, was opposed to a last-minute vote to increase the nation's debt limit. Such an eleventh-hour deal was struck in August 2011 to raise the ceiling the last time the nation's debt reached its limit. The political haggling that put the country at the edge of default resulted in a credit downgrade from the ratings agency Standard & Poor's.

"In terms of the debt ceiling debate, the rank and file in my conference have had it with last-minute deals where you can't read the bill before the ink gets dry," Graham said, also on "State of the Union." "We've got to do better in the future than we've done in the past. This doing things at the last minute behind closed doors must stop."

But without spending cuts attached to the increase, Graham said he couldn't support the debt limit increase, no matter the urgency.

"I believe we need to raise the debt ceiling, but if we don't raise it without a plan to get out of debt, all of us should be fired," Graham said.

"If you raise the debt ceiling by a dollar, you should cut spending by a dollar. That is the way to go forward," he added.

Rep. Nancy Pelosi, the Democratic minority leader in the House of Representatives, said it didn't make sense to link spending with increasing the debt limit, since the debt had already been incurred.

"You're going to say, 'I'm not going to pay my bills unless you stop buying stuff?'" she wondered on CBS' "Face the Nation."

"Right now we have to pay the bills that have been incurred," she said. "If you want to say cut spending for what we do next, fine. But don't tie it to the debt ceiling."

CNNMoney's Jeanne Sahadi contributed to this report.

Watch State of the Union with Candy Crowley Sundays at 9am ET. For the latest from State of the Union click here.


Filed under: Debt • Economy • TV-State of the Union
soundoff (94 Responses)
  1. Rudy NYC

    Republicans would once again be making a serious mistake to put global economy through that wringer again. The debt ceiling is not about future spending at all. It's about paying for spending that these same Republicans have already voted on and passed.

    January 7, 2013 09:54 am at 9:54 am |
  2. Denise

    Why don't they eliminate the cap on Social Security? Currently, annual wages over $113K stop contributing to Social Security. The concept is that the working class supports the retired class, not that a high earner will never withdraw that amount so why should they have to pay in that much. The majority of workers contribute on 100% of their pay their entire careers....this change would be fair and would go a long way towards funding social security.

    January 7, 2013 10:10 am at 10:10 am |
  3. rad666

    Great another last minute compromise that will see a lot of favors repaid in the form of tax loopholes or funding for congress members' friends.

    January 7, 2013 10:14 am at 10:14 am |
  4. Larry L

    @Denise

    Why don't they eliminate the cap on Social Security? Currently, annual wages over $113K stop contributing to Social Security. The concept is that the working class supports the retired class, not that a high earner will never withdraw that amount so why should they have to pay in that much. The majority of workers contribute on 100% of their pay their entire careers....this change would be fair and would go a long way towards funding social security.
    ================================================================================================ Terrific solution! I'd also recommend an amendment to the Constitution which stops all pay due the Congress, the President, and their staffs on the first day of each fiscal year if an approved, balanced budget isn't signed into law. They'd never get the money back for days lost. Let's make them do their jobs!

    January 7, 2013 10:24 am at 10:24 am |
  5. Laurie in Spokane

    We don't need to increase the debt limit – we need to cut spending. Pretty simple. We don't have the revenues to justify the spending, so something has to go. Something form everybody across the board. Cust spending by 3-5% on everything. We all share the pain equally.

    January 7, 2013 10:26 am at 10:26 am |
  6. Just a thought

    @Laurie in Spokane

    We don't need to increase the debt limit – we need to cut spending. Pretty simple. We don't have the revenues to justify the spending, so something has to go. Something form everybody across the board. Cust spending by 3-5% on everything. We all share the pain equally.

    -----
    Come on Laurie, don't get stuck on the silly train. Increasing the debt limit is to support the payment of BILLS, COSTS AND EXPENSES WE HAVE ALREADY INCURRED AND APPROVED FOR PAYMENT. What...? Do you sign a mortgage and then two or three years later say "I'm not going to pay it" and go into default.?

    Come on think....this is not rocket science.

    January 7, 2013 10:35 am at 10:35 am |
  7. Sniffit

    "We don't need to increase the debt limit – we need to cut spending. "

    That is so horrifyingly wrong and misinformed that you shoudl be duct-taped to a large board and presented in the middle of TIme Square are the poster boy results of our intentionally negligent MSM.

    January 7, 2013 10:43 am at 10:43 am |
  8. Just a thought

    @jpmichigan

    I hope they have the courage to really dig in and refuse to increase the debt limit unless they have significant spending cuts. Every time the pass a bill on the hill is loaded with more pork ( spending). Why can't they just pass a bill specific for what it is intended for? I know many will LOL at that thought, but for once do only what is intended, with no add on and PLEASE READ THE BILL BEFORE VOTING FOR IT!
    ------

    Thank Goodness your type of thinking, or lack thereof, leading this country. I'll say this again....Raising the debt ceiling allows this country to pay BILLS AND EXPENSES ALREADY INCURRED AND APPROVED. And yet again, Do you sign a mortgage agreement and two or three years later decided "....heck, I won't pay it" and instead go in default(?) That ruins your credit genius and makes borrowing more expensive, if some investor is crazy enough to deal with a welsher like you.

    Look, its ok to think...I know, I know, you GOP/Tea Party types think of intellect in negative terms, but we can't afford to have this country run on vapid ignorance.Think of the consequences to our economy as well as those of the world's economy at large. Now that you have this lesson, go forth and prosper

    January 7, 2013 10:43 am at 10:43 am |
  9. Bill from GA

    Congress' approval rating is now around 18%. With these Debt Ceiling issues, they will soon be back to the single digits.

    I don't always agree with Pelosi, and don't really like her a lot even when I do agree. But she got it 100% right:

    "Right now we have to pay the bills that have been incurred," she said. "If you want to say cut spending for what we do next, fine. But don't tie it to the debt ceiling."

    If Congress wants to cut spending, just leave Sequester in place. Then get serious about a REAL budget, passed by the House and Senate, and agreed to by the President. Anything less is a failure to do their duty.

    January 7, 2013 10:44 am at 10:44 am |
  10. scarf

    Republican calls to cut spending in return for an increase in the debt limit lost all legitimacy when they agree to the fiscal cliff rescue. The fiscal cliff came about as a result of Republicans demanding spending cuts, and then they backed away from the cliff without any spending cuts; but the damage to the country's credit rating had already been done. Let's admit it. Spending needs to be cut, but it shouldn't be linked to agreeing to borrowing to pay bills already incurred. If the Republicans are serious about cutting spending, then they should quit spending, rather than refuse to borrow.

    January 7, 2013 11:11 am at 11:11 am |
  11. Raise the limit, then what?

    I am a Republican, but fully agree with Democrats that we need to pay for the spending already incurred. It would be irresponsible not to. However, it would be just as irresponsible to not get our annual budget deficits under control. This will need to happen through a painful series of spending cuts AND tax increases. Still waiting to hear anyone (Republican or Democrat) come up with a realistic plan for this. (And Democrats, just taxing the "evil" rich isn't going to be enough. So can we stop beating that drum? Part of the solution, yes! Sole solution, no!)

    January 7, 2013 11:29 am at 11:29 am |
  12. Bill from GA

    On December 21, 2012, the AP reported: "The House on Thursday overwhelmingly passed a $633 billion defense bill for next year despite Pentagon complaints that it spares outdated but politically popular weapons at the expense of the military’s ability to fight."

    So the House gets their agenda in stone, then complains about spending. What else is new??

    And the repubs want to hold the economy hostage over money already spent. Are their voters all idiots, or is it just that The Elected Ones think so??

    January 7, 2013 11:35 am at 11:35 am |
  13. Fair is Fair

    Denise

    Why don't they eliminate the cap on Social Security? Currently, annual wages over $113K stop contributing to Social Security. The concept is that the working class supports the retired class, not that a high earner will never withdraw that amount so why should they have to pay in that much. The majority of workers contribute on 100% of their pay their entire careers....this change would be fair and would go a long way towards funding social security.
    ----------
    Well,, Denise... here's why.

    While true that the amount of wages subject to SS tax is capped, the benefit is capped as well. In other words, no matter if someone makes $113,000 a year or $113 million a year, the amount they can collect in monthly SS benefits is the same.

    So if you want to take the cap off the amount subject to taxation, you have to be willing to take the cap off the amount payable. And never... NEVER bring means testing into the equation. Deal??? Or do you want the "wealthy" to fund everyone else's retirement as well as what they already pay for?

    January 7, 2013 11:37 am at 11:37 am |
  14. Sniffit

    "Or do you want the "wealthy" to fund everyone else's retirement as well as what they already pay for?"

    Well, seeing as how they are all the "job creators" (supposedly), then they should be funding everyone's retirement up front via their wages and benefits instead of realying on the gov't to pick up the tab when they do things like, oh, I dunno, hold middle-class wages virtually stagnant for 40+ years and lobby the gov't to get rid of minimum wage (let alone keep it so low that you can't live on it), etc. They can pick their poison or we'll pick it for them.

    January 7, 2013 11:49 am at 11:49 am |
  15. Goose66

    What short-term memories these Democrats have. Have we all that quickly forgotten why a debt-ceiling was put in place to begin with? If the logic is that the debt ceiling is about already incurred debts and shouldn't be tied to discussion of cutting teh debt, then having a debt ceiling makes no sense. Why did Democrats vote for it in the first place? Are they somehow smarter or more logical now now than they were then? The answer is no - this is simply a new talking point handed down by the White House to convince the American people that Republicans as stupid. But it requires that Americans be stupid enough to buy it. President Obama, there are some of us that aren't stupid and we clearly see the tactic and understand that the debt ceiling is ALL ABOUT discussing and dealing with the debt.

    January 7, 2013 11:59 am at 11:59 am |
  16. Fair is Fair

    Sniffit

    "Or do you want the "wealthy" to fund everyone else's retirement as well as what they already pay for?"

    Well, seeing as how they are all the "job creators" (supposedly), then they should be funding everyone's retirement up front via their wages and benefits instead of realying on the gov't to pick up the tab when they do things like, oh, I dunno, hold middle-class wages virtually stagnant for 40+ years and lobby the gov't to get rid of minimum wage (let alone keep it so low that you can't live on it), etc. They can pick their poison or we'll pick it for them.
    ------–
    Oh, but they do... in addition to the 6.2% withheld from a worker's paycheck, the employer matches that penny for penny. That's a total of 12.4% of gross earnings, which compounded over the typical 45-year working career, should be enough to comfortably retire on. The only problem is that we're talking about a government run system... in other words, completely screwed up.

    January 7, 2013 12:01 pm at 12:01 pm |
  17. Bill from GA

    For all the talk about removing the cap on SS, or not, remember that lower-income, WORKING people, who don't spend their life behind a desk and on the golf course, don't live as long, usually, and thus get LESS of what they put into SS, on average.

    And if you think "They should get better jobs", well, someone has to build the houses, drive the trucks, etc.

    January 7, 2013 12:01 pm at 12:01 pm |
  18. Goose66

    What short-term memories these Democrats have. Have we all that quickly forgotten why a debt-ceiling was put in place to begin with? If the logic is that the debt ceiling is about already incurred debts and shouldn't be tied to discussion of cutting teh debt, then having a debt ceiling makes no sense. Why did Democrats vote for it in the first place? Are they somehow smarter or more logical now now than they were then? The answer is no – this is simply a new talking point handed down by the White House to convince the American people that Republicans as obstructionists. But it requires that Americans be ignorant enough to buy it. President Obama, there are some of us clearly see the tactic and understand that the debt ceiling is ALL ABOUT discussing and dealing with the debt.

    January 7, 2013 12:03 pm at 12:03 pm |
  19. Larry L

    In a dynamic and interconnected world economy weak central governments can't defend their political, social, military, or economic interests. If Tea Party extremists were actually given the full control they want the Red States would quickly implode in their attempts to replicate federal functions (like EPA, Commerce, State, FEMA, the FBI, CIA, CDC, NOAA, Medicare, Social Security, USDA, FDA, Interior, Justice, and Defense). Visualize all federal functions removed from those states... Do they expect to live well without the services provided? Really?

    January 7, 2013 12:04 pm at 12:04 pm |
  20. Anonymous

    aaaaahhhhh....what's that bell I hear ringing? Yes, its the bell signaling the final run of the [R]-controlled House. The House [R] caucus is the home to some of the most regressive specimens of the human species.

    I'm loving it.

    Frankly, unless the American electorate loses another 10 IQ points over the next year and a half, I do not see how the [D]s can lose in 2014. If the House [R]s do their job for America, they will follow [D] priorities, and the [D]s win. If the House [R]s continue to ignore America, intelligent Americans will continue to blame them, and the [D]s win.

    Either way, the [D]s win. And America can FINALLY start a concerted economic recovery from the 2008 [R]-caused economic debacle.

    January 7, 2013 12:14 pm at 12:14 pm |
  21. Larry L

    @Fair is Fair

    While true that the amount of wages subject to SS tax is capped, the benefit is capped as well. In other words, no matter if someone makes $113,000 a year or $113 million a year, the amount they can collect in monthly SS benefits is the same.

    So if you want to take the cap off the amount subject to taxation, you have to be willing to take the cap off the amount payable. And never... NEVER bring means testing into the equation. Deal??? Or do you want the "wealthy" to fund everyone else's retirement as well as what they already pay for?
    ================================================================================================
    If Social Security fails how long do you think the wealthy would be able to retain the enterprises they own – and remain wealthy? If our society collapses how many wage earners would exist above the $113k level? Why not apply means testing to the amount above some high level of income – for example the $400k the Congress accepted as the level for "rich"? Wouldn't that provide insurance for the wealthy to continue whatever endeavors they've built that provides them a high income? Who do you think would be paying for the welfare, Medicare/Medicaid, housing, and food assistance programs the poor would need if Social Security didn't exist? Look at the demographics – we're about to become a society of old people with very little retirement savings. Smart? No. Still, being "fair" will not wish the problem away. America will not let folks starve.

    January 7, 2013 12:20 pm at 12:20 pm |
  22. DumbasRocks [R]s

    ahhhh, what's that bell I hear ringing???? Why, its the bell tolling for the final leg of the [R]-controlled House.

    January 7, 2013 12:27 pm at 12:27 pm |
  23. Sniffit

    "Oh, but they do... in addition to the 6.2% withheld from a worker's paycheck, the employer matches that penny for penny. That's a total of 12.4% of gross earnings, which compounded over the typical 45-year working career, should be enough to comfortably retire on. The only problem is that we're talking about a government run system... in other words, completely screwed up."

    They do? Is that why we get to read stories about things like the Waltons literally paying people minimum wage at their Wal-Marts and only hiring part-time to avoid the benefits laws and then sticking instructions in their ripped-off employees' paycheck envelopes telling them how to access MassHeatlh and other programs designed for the unemployed and poor?

    "which compounded over the typical 45-year working career, should be enough to comfortably retire on"

    Not at minimum wage. Heck, not even at the average middle-class salary. The only reason it would be right now is because of the supplementation provided by SS, but without it...which is what I was talking about...you'd be completely hosed.

    January 7, 2013 12:29 pm at 12:29 pm |
  24. kendall

    The US government brings in about 200 billion in taxes a month. The "bills" everyone is talking about – the interest on the debt is about 40 billion a month. So the government has about 160 billion a month to spend on everything else, so SS could still be paid, the military could still be paid as could a lot of other programs. But the people in Washington don't want to do that they just want to make sure that their pet projects are funded and that has to stop.

    January 7, 2013 12:30 pm at 12:30 pm |
  25. California Gary

    Just the fact that the GOP is out there threatening another manufactured debt ceiling crisis is already driving the stock market down. When will they finally realize that their "bluster" and "bull" has real consequences? Why must we "kill the economy" in order to save it? And since the GOP apparently believed, as voiced by the VP himself during the Bush years that "deficits don't matter".......why do they now matter so much now that they are willing to shut down the government and destroy the U.S. and world economy because of them? Is there no longer a voice of reason in the GOP?

    January 7, 2013 12:32 pm at 12:32 pm |
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