The debt ceiling issue has resulted in a serious controversy in the U.S. While the Democrats desperately want to raise the debt ceiling, the Republicans want a cut in the government budget as a price of raising the ceiling. Negotiations are on but experts believe that an agreement would not be reached till August. It is relevant to mention here that the U.S hit the
debt ceiling on 16th May and the maximum amount that can be borrowed was reached.
The treasury department has clearly stated that debt ceiling must be raised by 2nd August. Otherwise the government would default on its loans. Treasury secretary Timothy Geithner urged Congress “to act to increase the statutory debt limit as soon as possible”. Defaulting on loans, Geithner warned, can have catastrophic effects.
Paul Ryan, a Wisconsin Republican, supports the budget plan proposed by the Republicans. It is worth mentioning that the plan would cut spending by $6 trillion over a period of ten years. With this plan, the Republicans aim to turn Medicare into a private insurance program. They intend to do away with the conventional healthcare system with subsidies.
However, Republican Newt Gingrich described Ryan’s plan as a “radical change” and “right-wing social engineering”. With that comment, Gingrich virtually invited criticism and was condemned by the conservatives. Since then, Gingrich has taken a 180 degree turn and said that he did not describe Ryan’s plan correctly, but would have voted for it. But the democrats have already grabbed the opportunity and are quoting Gingrich to criticize Ryan’s plan.
In between, Mitch McConnell, Senate minority leader, informed the press that he is not going to vote for raising the ceiling without any assurance to bring down the cost of Medicare as well as Medicaid.
McConnell believes that a definite plan has to come out from deficit discussions between Obama administration and lawmakers. Meanwhile the government is contemplating waiving tax cuts for well-off families. This can generate extra tax revenue of $1 trillion. But the government is not considering increasing taxes right now.
The Republicans are negotiating hard with the Democrats for a budget compromise. Democrat Senator Dick Durbin believes that this will lead to a heated debate on one of the most important issues of our times.