As debt debate begins, Obama praises 'Gang' plan

Wednesday, July 20, 2011

WASHINGTON (AP) — Declaring “11th hour” urgency” to raise the government’s borrowing limit, President Barack Obama on Tuesday hailed a plan by “Gang of Six” senators from both parties to reduce federal deficits as the kind of balanced approach that could break the economy-threatening deadlock. He said it was time for Congress to rally around such a proposal.

“We don’t have any more time to engage in symbolic gestures, we don’t have any more time to posture. It’s time to get down to the business of actually solving this problem,” the president said.

Obama spoke even as House Republicans pushed toward a vote on separate legislation that would require trillions in spending cuts and agreement on a balanced-budget constitutional amendment in exchange for an increase in the debt ceiling, which the government says must be raised by Aug. 2 to avoid economic calamity. That House plan, expected to come to a vote Tuesday evening, was unlikely to get through the Senate, and Obama has said he would veto it if it ever arrived at his desk.

Facing the deadline in two weeks, Obama said he would call House Speaker John Boehner after Tuesday’s vote to invite him and other leaders back to the White House for meetings in coming days.

Obama, Boehner and other top leaders met last week for five days straight without reaching agreement, leading to warnings from credit agencies about dire consequences if the U.S. defaults on its obligations for the first time, rendering it unable to pay its bills.

Obama added his own warning Tuesday, saying that while financial markets have shown confidence thus far in Washington, it won’t last much longer if lawmakers fail to act.

But he found cause for optimism in the announcement Tuesday by leaders of a bipartisan “Gang of Six” senators that they’re nearing agreement on a major plan to cut the deficit by more than $4 trillion over the coming decade.

“I think it’s a very significant step,” Obama said, calling it “broadly consistent with the approach I’ve urged.”

The Gang of Six plan calls for an immediate $500 billion “down payment” on cutting the deficit as the starting point toward cuts of more than $4 trillion that would be finalized in a second piece of legislation. It would raise revenues by about $1 trillion over 10 years and cut popular benefit programs like Medicare and Medicaid — dealing out political pain to Republicans and Democrats.

That mixture of cuts and new revenue is the “balanced approach” Obama has urged, though it’s rejected by many Republicans because it would require higher taxes for some.

Rep. Dave Camp, Republican chairman of the House Ways and Means Committee, said the spending cuts and budget mechanisms in the plan could form the basis of a deal but tax increases would be a big problem for him and fellow GOP lawmakers.

“A trillion dollars is a lot, by any measure,” Camp said of the tax increases in the plan.

While praising the broader plan, Obama said it was still important to have a “Plan B” option being worked on by Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell as a fallback. The McConnell-Reid plan would give Obama the ability to raise the debt limit by $2.5 trillion in three installments over the next year without a separate vote by lawmakers. Instead, a panel of House and Senate members would be created to recommend cuts in benefit programs, with their work guaranteed a yes-or-no vote in the House or Senate.

While all that was going on behind the scenes, advocates of the legislation to be voted on in the House on Tuesday said it would cut spending by an estimated $111 billion in the next budget year and then by more than an additional $6 trillion over a decade — and require Congress to send a balanced budget amendment to the Constitution to the states for ratification — in exchange for raising the debt limit by $2.4 trillion.

With the measure facing a veto threat from the White House, Boehner said he was exploring other alternatives to avoid government default.

“I do think it’s responsible for us to look at what Plan B would look like,” he said at a news conference a few hours before the opening of debate on the legislation backed by conservative lawmakers.

Said Obama: “The problem we have now is, we’re in the 11th hour, and we don’t have a lot more time left.”

More like this story

clingingredneck 1 year, 10 months ago

If these idi ots listened to the American People, they would pass Cut, Cap and Balance! They don't listen, just like McCaskill doesn't listen. They'll vote to raise taxes on not only the wealthy but the middle class and ignore the bill that makes them behave. Vote every last one of these idi ots out!!!

JCLifer 1 year, 10 months ago

And they will ignore the fact that nearly half of the taxpayers on the lower income levels PAY NO TAXES AT ALL. Everyone should pay SOME income taxes. If they have no skin in the game, they will not value it and just try to rip everyone else off.

3blindmice 1 year, 10 months ago

the taxes for the wealthy and corporations is the lowest is has been in 30 years and still there are no jobs. it's time for the billionaires living off their heirs pay a little more than 15% in taxes.

Gabrielle 1 year, 10 months ago

interestingly, the taxes are what have driven manufacturing overseas.

John 1 year, 10 months ago

Petunia: That is an over-simplification. The true motive force behind the overseas movement is the cost of labor, tax costs are a minor thing. Sadly, many cultures provide a lobor force that will work for pennies an hour/day. Many expect workers in this country to work for similar wages in order to draw the businesses back to this country -- people cannot live in this country on the kind of money paid to workers overseas. However, there seems to be a movement back here despite the wages; they are finding the quality of work to be inferior to that experienced in this country.

Gabrielle 1 year, 10 months ago

I appreciate your comments and I stand corrected. Seems,then, there are two things going on - the labor costs, as you indicate, and taxes. Factories have moved b/c of the high labor costs. Also, major corporations have moved their offices to Europe - Switzerland? - specifically because of taxes.

I am glad to hear the return of manufacturing to this country. Within the last year, I was talking with a local busines owner about a product they sell. Just as you mentioned, the company moved to China due to 'costs'. Because of the poor output quality, the owner has to go over there often to maintain the top quality he desires in his product.

Yes, it is sad the way other countries/cultures handle business. I surely would like to see their citizens receive good treatment, be employed and live a comfortable life. I also would like for the USA citizens to do so. Seems they don't necessarily need to be mutually exclusive. Surely there is a way to resolve this.

John 1 year, 10 months ago

It is not that the corporate tax rates are too low, it is that loopholes allow most corporations to escape paying taxes (think G.E.). The U.S. messed up when the courts ruled that corporations are individuals and should bew treated as such. Every corporation that makes a profit should pay taxes and not be able to write off golf club memberships, meals, and drinks as a customer expense, nor should a corporation be allowed to form a PAC vicariously through its employees and investores nor should they be allowed to provide expenses for junkets for the politicos.

Gabrielle 1 year, 10 months ago

It seems ridiculous to give corporations such status. Don't know much about what is involved in creating a business/corporation - whatever is involved, it is people who set it up. This is a reason why I like the consumption tax. And everyone pays something.

evenkeel 1 year, 10 months ago

The corporate tax rate should be zero.

Corporations do not really pay taxes; it is the owners of corporations who pay corporate income taxes. That is, the shareholders are the payors.

Corporate taxes contribute 9% of total federal revenue. That is not such a great amount considering what it is costing us.

The cost of compliance with the tax code is immense and of course, much gamesmanship and shenanigans are going on to avoid the corporate tax. In addition, politicians dole out favorable tax treatment to some corporations and industries and in return those favored corporations and industries somehow find ways to express their appreciation and gratitude to the politicians. You want less lobbyists? I do.

Abolish the corporate income tax and the U.S. is more globally competitive, less wasteful and less corrupt.

John 1 year, 10 months ago

"Corporations do not really pay taxes . . ." IF that were the case then why is it such a priority for corporations to move to countries that have lower corporate taxation? Of course they pay taxes. Investors pay taxes on their investments in various forms of income taxes. IF "Corporations do not really pay taxes . . .", then how could they contribute 9% of total federal revenue?

John 1 year, 10 months ago

Graceful: While I support your right to disagree, it is obvious that you do not do your homework or, perhaps it is because you take them as personal attacks. MOST other countries where we see their businesses making inroads into U.S. business subsidize their exporting businesses allowing them to sell goods more cheaply. Your statement about " . . . lack of understanding . . . " cuts both ways. Corporate taxes are not the main reason, not even a major reason, for corporations to move overseas. Taxes, unfortunately, are easy for them to avoid paying. It is the higher cost of labor in this country that encourages them to leave. However, they then find that the ability, professionalism, and quality of labor in this country is the best they can find. Corporations are beginning a slow migration back into the U.S. where they are generally happy to pay our higher wages (yes, even union wages -- although they still grouse about that.)

Gabrielle 1 year, 10 months ago

Two questions for you, Graceful:

What are you calling 'jealousy towards corporations'?
What does 'They should not be at the mercy of government. If such were the case none of a corporations property would be safe and the economy would be worse off for it.' mean?

John 1 year, 10 months ago

What a silly reasoning. So, a corporation needs "to be able to sue . . . They need to have a say in the regulations. . . " Why? So the corporation should have input, as a corporation and if follows (with your logic), so should the CEO, CFO, president, all the vice presidents, and all the other members of the board plus all the investors. Near as I can figure it, that logic provides at least 7 votes (and sometimes thousands) against a sole-proprietorship that has only a single vote (the owner's). Corporations, their concentrated power, and their tyranny (think WalMart) are destroying the productivity and citizenship of this country and, by extension, this world. CORPORATIONS are NOT people, instead they FEED off of the people.

John 1 year, 10 months ago

I am not jealous of corporations. However, if they are going to operate here with the privileges they receive, then they should pay the taxes. There should be no loopholes. So, the investor gets a 50 cents/share return in their dividend as opposed to 55 cents or 60 cents, big deal, but it would mean a tremendous amount into the country's coffers.

John 1 year, 10 months ago

Graceful: Using your logic, one would insist that no business should have to pay any taxes because all they do is pass it on to the consumer. Duh? You don't believe that ALL businesses do that? Good grief, that is called inflation. Of course, the consumer helps to cause inflation as well by insisting on higher wages. Prime example of a visicious circle. Unfortunately, because the corporation is considered an individual in the eyes of the law, they usually win. Why? Because one corporation has many more votes than an individual or privately held business.

Gabrielle 1 year, 10 months ago

I agree that everyone should pay SOME taxes. That is why I like the consumption tax - tax on purchases. The sense I have of the lower income levels 'just try to rip everyone else off' is that - at least some maybe most - are fearful of having nothing - of their needs not being met - and it becomes almost a battle to have a little to meet the basics. Some are trying very hard to make ends meet. Of course, the concerns are those who don't care to work hard to acquire for their needs and accomplish.

3blindmice 1 year, 10 months ago

"The Fortune 500 generated nearly $10.8 trillion in total revenues last year, up 10.5 percent. Total profits soared 81 percent." fortune magazine.
guess who doesn't benefit from these profits.

Gabrielle 1 year, 10 months ago

Isn't it something that this happened in a time when we are in a recession/depression aka 'tough times' - don't know what to call it - having heard so many statements on it. How can this be?

Gabrielle 1 year, 10 months ago

Not sure where you are getting this 'want to rob them, too?' You sound like 'others'. Yes, share the wealth - hire people. Seems that to do this requires a more stable environment. This is why I like Herman Cain.

Gabrielle 1 year, 10 months ago

The 'short sighted' you refer to is another perspective on how to resolve the problems at hand. For sure, I am happy people are profitting from their endeavors - given legal, 'moral' standards are part of it. So, look at the bigger picture - why sooo many companies doing so well - profits, no less - when we are supposedly experiencing such hard times. It seems that if things are so bad there would not be profits as they are with revenues UP 10.5%..... seems everything would be down to various degrees.

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