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Debt Crisis Looms as Congress Digs in Its Heels

Debt Ceiling Crisis John BoehnerBy ANNE FLAHERTY

Congressional leaders on Sunday showed no signs of emerging from their corners to resolve the next step in the financial crisis, with Democrats still talking about higher taxes on the wealthy and the Senate's top Republican suggesting that a crippling default on U.S. loans was possible unless there were significant cuts in government spending.

"It's a shame we have to use whatever leverage we have in Congress to get the president to deal with the biggest problem confronting our future, and that's our excessive spending," said Sen. Mitch McConnell (R-Ky.)

Last week's deal to avert the combination of end-of-year tax increases and spending cuts known as the "fiscal cliff" held income tax rates steady for 99 percent of Americans but left some other major pieces of business unresolved.

By late February or early March, the Treasury Department will run out of options to cover the nation's debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling. Economists warn that a default could trigger a global recession.

Also looming are deep automatic spending cuts expected to take effect at the beginning of March that could further erase fragile gains in the U.S. economy. Then on March 27, the temporary measure that funds government activities expires, and congressional approval will be needed to keep the government running. It's one more chance to fight over spending

Lawmakers said debt talks will consume Congress in the coming weeks, likely delaying any consideration of an expected White House proposal on gun restrictions in the wake of the Connecticut school shooting.

Republicans say they are willing to raise the debt ceiling but insist any increase must be paired with significant savings from Medicare, Medicaid and other government benefit programs. President Barack Obama has said he's willing to consider spending cuts separately but won't bargain over the government's borrowing authority.

"One thing I will not compromise over is whether or not Congress should pay the tab for a bill they've already racked up," Obama said in his weekly radio and Internet address.

Democrats said further tax increases for the wealthiest Americans were still possible as Congress looks to close the gap between revenues and expenditures. Democrats point out that Obama has already agreed to significant spending cuts, and that the latest deal only gets the nation to about half of the revenue it needs to resolve the red ink.

"Trust me, there are plenty of things within that tax code -- these loopholes where people can park their money in some island offshore and not pay taxes. These are things that need to be closed. We can do that and use the money to reduce the deficit," said Illinois Sen. Dick Durbin, the second-ranking Senate Democrat.

House Democratic leader Nancy Pelosi of California said she, too, wants to put "everything on the table from the standpoint of closing loopholes."

But McConnell bluntly declared that the "tax issue is over" after last week's agreement.

"We don't have this problem because we tax too little; we have it because we spend too much," McConnell said.

Making the rounds on the Sunday talk shows, McConnell was asked repeatedly whether Republicans were prepared to see the nation default on its spending obligations. McConnell said that wouldn't be necessary, so long as Obama agrees to the spending cuts.

But at one point, when asked by NBC's David Gregory whether the GOP strategy will be to hold the debt ceiling "ransom" in exchange for spending cuts, McConnell said it was a "shame we have to use whatever leverage we have" to get the president's attention.

"None of us like using situations like the sequester [automatic across-the-board spending cuts] or the debt ceiling or the operation of government to try to engage the president to deal with this," McConnell said.

Sen. Lindsay Graham (R-S.C.) didn't dismiss the idea of allowing a partial shutdown of government until an agreement can be reached. Texas Sen. John Cornyn and other Republicans have floated the idea of a shutdown as a way of winning deeper spending cuts.

"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.

Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, said the Republican strategy amounted to: "Give us what we want ... or we're going to tank the United States economy."

Pelosi said she believes the president has enough authority under the 14th Amendment to raise the debt ceiling without Congress' blessing. But the White House has said previously that it does not believe that the amendment -- which says the "validity" of public debt shouldn't be questioned -- gives the president that power.

McConnell spoke on NBC's "Meet the Press," ABC "This Week" and CBS "Face the Nation." Pelosi was on CBS. Durbin and Graham appeared on CNN's "State of the Union" and Van Hollen was interviewed on "Fox News Sunday."

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nc2879

Americans have had it to good for far to long, time for huge tax increases across the board. People don't need 60" plasma tv's and brand new homes and cars. The country needs more money and the people outta fork it over !!!

January 26 2013 at 12:03 AM Report abuse rate up rate down Reply
drmaxchartrand

Come on, Dems. THe spending is pushing over the cliff!

January 25 2013 at 11:46 PM Report abuse rate up rate down Reply
Michael

My fellow Americans....there is NO budget ....because it is impossible to figure in 16 trillion dollars. The only think keeping us afloat right now...the ONLY thing....is Greece ...Spain....France....Italy.....and a bunch of other countries with financial problems as bad or worse than ours. Like dominos....when one falls...they all will. Ain't a matter of if...it is a matter of when.

January 25 2013 at 9:19 PM Report abuse +2 rate up rate down Reply
mamus812

lesson nancy go all the way down to the bottom of the 14th amendment sec. 5 the congress shall have power to enforce, by appropriate legislation, the provisions of this article. it says nothing about the president has the power if he should then congress should impeach him and vote you out for going against your oath of office to protect the constitution

January 25 2013 at 9:19 PM Report abuse rate up rate down Reply
vandation

Obummer has made lots of cuts ? Seriously ? No budget in the last three years. Looking on the GOV website, the cuts he made ..... amount to less than 2.7% of what OUR DEFICIT NUMBER IS !!!!

Why are D - Baggers so bad at math ?

January 25 2013 at 8:38 PM Report abuse rate up rate down Reply
ga7smi

we don't need to borrow money - never have - except to manipulate currency value - $ is over valued by50% - hence we no longer produce anything and import everything - Reagan started this mess - print money, tax the rich to their knees and start WWIII - only way out

January 25 2013 at 7:13 PM Report abuse rate up rate down Reply
parthenon1

Why do Democrat law makers enjoy keeping hitting themselves with hammers? Because it feels so good when they stop. Most all Democratic administrations in past years like Republicans have found the quickest way to bring prosperity to a down economy is to cut taxes and eliminate unnecessary regulations to encourage growing their businesses, adding employees who pay income taxes instead of getting government support raises economic activity. For some reason this administration believe continuing and even expanding the wrong actions will get a different result. Remember "When you find your self in a hole ...stop digging". Start doing business friendly acts instead of berating them.

January 25 2013 at 6:51 PM Report abuse +1 rate up rate down Reply
tjstieg

Quit the vacuous posturing---trying to make people think you are doing your jobs by "digging in your heels" today and having a cigar and laughing with your "opponent" tomorrow over what you both have just done to US.

January 25 2013 at 6:36 PM Report abuse rate up rate down Reply
rkeeeballs

...First place to make cuts....MILITARY....PENTAGON....CIA....Healthcare Benefits for Congress, Foreign aid..

January 25 2013 at 6:14 PM Report abuse rate up rate down Reply
1 reply to rkeeeballs's comment
rem119

Just reverse the order and you got it right!

January 25 2013 at 9:47 PM Report abuse rate up rate down Reply
Mike

Where do I get my free stuff or my tax breaks? Not rich and not under the poverty benchmark. Which line do I stand in? All incumbents should be voted out in the next election. It doesn't seem like one of them deserves they taxpayer funded salary they are recieving.

January 25 2013 at 5:11 PM Report abuse +1 rate up rate down Reply