Time Running Out for Debt-Ceiling Deal

August 2 looms large as congressional leaders continued to scramble over the weekend, hoping to find a solution to the months-long negotiation. The Washington Post reports that talks are centered around a proposal from Harry Reid and Mitch McConnell to cut spending by $1.5 trillion over the next ten years without any increases to revenue.

They'll need to work quickly. The Treasury Department set August 2nd as the deadline for when the government can no longer rearrange its finances to pay all of its obligations (the federal debt limit was actually reached on May 16 -- Timothy Geithner has just drawn funds from government pension funds to cover costs in the meantime). President Obama countered his own appointee and said that a compromise is needed by July 22, the end of this week. Pushing the deal until the final night puts the nation's fiscal stability at risk and would spook investors, encouraging credit agencies to downgrade the United State's triple-A rating.

A deal reached on July 31 would do no good. It takes time to craft the exact legislative language on what specific programs will be cut once the broad outlines of a compromise are agreed upon. Take the current budget impasse in Minnesota. Even though the sides reached an agreement in principle last Thursday, the Minnesota government shutdown entered its 18th day on Monday. Late last week Democratic Governor Mark Dayton accepted the proposal Republicans offered at the beginning of the shutdown. Dayton had hoped to close the state's budget gap by raising taxes on Minnesota's wealthy, though much like national Republicans, the GOP-controlled legislature resisted any increase to the tax rates. Instead the budget gap is solved through gimmicks, borrowing future money from schools and issuing bonds against future money raised through the tobacco tax. Dayton may have caved to Republican demands, with the broad budget picture now in place, but the small details of writing legislation keep the government's doors closed and 22,000 state employees at home. The two sides met throughout the weekend and still do not have enough details pinned down to push the bills through a special session on Monday.

The U.S. Congress will face those same hurdles. As Washington Monthly's Steven Benen notes, Senate procedural hurdles allow dissenters such as Jim DeMint to slow down the bill's passage with filibusters. Even if Harry Reid and Mitch McConnell can successfully whip enough of their respective caucuses to vote for the compromise plan, the far-right wingers in the Senate can gum up the works and push the clock to the limit before the government begins to default on its obligations.

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