A deficit reduction plan proposed by Republican House Speaker John Boehner was scheduled to be voted on today but Boehner himself postponed the vote until tomorrow.
Washington remains paralyzed as the stalemate in talks to reduce the budget deficit, a necessity in order to raise the debt ceiling, goes on between Republicans and Democrats, causing markets to be nervous over the risk of a downgrade of the U.S. top-notch AAA rating.
A week before a deadline for Congress to raise the $14.3 trillion borrowing limit, Republicans and Democrats are fighting and failing to compromise on a budget plan.
The non-partisan Congressional Budget Office (CBO) said both chambers’ debt-cutting plans fall short of promised savings.
John Boehner proposed a two- step plan to raise the debt limit, which the White House said Obama would veto, after the CBO said it would save just $850 billion rather than the advertised $3 trillion.
Meanwhile, Senate Majority Leader and Democrat, Harry Reid’s plan would save $2.2 trillion over 10 years, but short of its $2.7 trillion goal, according to the CBO.
Obama endorsed Reid’s proposal as “a much better path,” though it doesn’t include the tax revenue increase that the president said is needed to address the deficit. He criticized Boehner’s plan as “kicking the can further down the road.” He said the two sides need to arrive at “a fair compromise.”
Obama, who wants a $2.4 trillion boost in the $14.3 trillion debt ceiling — enough to last until after the November 2012 elections — has said the two-stage approach is unacceptable. “It would leave uncertainty in the markets and jeopardize the fragile economy” said Obama.
Meanwhile, Treasury Secretary Tim Geithner said unless the $14.3 trillion borrowing limit is increased, he does not see any further options for the U.S. to avoid a default.
Various ratings agencies have already threatened to downgrade the country’s top notch AAA rating, even if the debt ceiling is raised. The real key is not raising the debt ceiling but taking care of the long term, and producing a sustainable solution to the debt crisis