WASHINGTON (Reuters) – Top Republicans on Wednesday pressed the White House to reveal its proposed terms for a deal to increase the country’s borrowing authority, as officials indicated a $2 trillion hike would be needed to stave off a debt default through the 2012 U.S. elections.
With the United States expected to hit its $14.3 trillion debt limit in the next two weeks, pressure is building in Washington to ensure the government can continue borrowing and avert a default that would roil markets across the globe.
Republicans and some Democrats say they won’t back an increase without an agreement to ensure debt levels remain manageable over the long term, but the two parties are sharply divided on what steps would be needed.
With several deficit-reduction proposals floating around Capitol Hill, Vice President Joe Biden is scheduled to meet with top lawmakers from both parties at 10 a.m. EDT (1500 GMT) on Thursday to see if a deal is possible.
“You learn a lot more by listening than you do by jamming something down somebody’s throat,” said Democratic Senator Max Baucus, one of the lawmakers named to the group.
“I’ll be looking, listening, asking constructive, probing questions to try to find space for agreement.”
The two Republicans picked for the meeting said they wanted to first see the administration’s opening bid.
“We believe a detailed proposal from the president will be the key to the success of the working group,” Senator Jon Kyl and House of Representatives Republican Leader Eric Cantor told Biden in a letter.
The Obama administration has said it is up to Congress to determine how large an increase is needed, and Republican leaders have said they would prefer one large increase, rather than a series of smaller ones.
Treasury Department officials have told lawmakers an increase of roughly $2 trillion is needed to ensure Congress won’t have to tackle the issue again before the November 2012 elections, according to Senate and administration sources.
Another closely watched group known as the “Gang of Six” that is trying to forge a deal appeared to be losing momentum as one member left town for a family matter and another member said he would move forward with a budget proposal of his own.
The group is expected to get back to work next week when Republican Senator Tom Coburn returns, and Democratic Senator Kent Conrad said his separate proposal would not undercut the group’s work.
BATTLE OVER TAXES, ENTITLEMENTS
Though the group is seen as the most credible bipartisan effort going, it still faces skepticism. Any effort to reach a deal will have to overcome liberals’ reluctance to cut entitlement programs and conservatives’ resistance to tax increases.
“I fully do not expect them to come up with anything because there is such a wide split in philosophy among that group,” said Republican Senator Orrin Hatch.
Polls show Americans are strongly opposed to a debt-ceiling increase amid growing concern about the country’s mounting debt load. Business groups fear a protracted round of brinkmanship could rattle markets and drive up the government’s borrowing costs, and they are urging Congress to act.
Treasury says it will be able to stave off default until early August by using pension funds and other accounts to meet its interest payments even if it lacks the authority to issue new bonds, but has urged Congress to act well before then.
The country’s total debt more than doubled over the past 10 years as Washington cut taxes while pursuing wars in Iraq and Afghanistan. The deepest recession since the 1930s blew an even bigger hole in the budget, and deficits have hovered near 10 percent of gross domestic product in recent years.
(Additional reporting by Richard Cowan, Thomas Ferraro and Kim Dixon; Editing by Deborah Charles and Todd Eastham)