Obama May Back Deal to Raise Debt Ceiling

The Obama Administration is trying to balance keeping spending up in certain areas while cutting federal deficits and may be open to striking a deal with Republicans to raise the debt ceiling above its current $14.3 trillion levels.

Obama on Wednesday is set to unveil his long-term plan to reduce budget federal deficits.

David Plouffe, President Barack Obama's senior advisor, noted that the Republican leadership and the President are in agreement that the debt ceiling needs to be raised. The Obama administration has been calling for a rise in the debt ceiling to avoid the specter of the U.S. government defaulting on its obligations.

Well, the speaker of the House himself said we need to act like adults in this. Mitch McConnell, Harry Reid, Eric Cantor, John Boehner, all the leaders have said we have to raise the debt limit, so we're going to, Plouffe said on NBC's Meet the Press.

House Speaker John Boehner said on Saturday at a fundraiser that lawmakers in the House of Representatives would not pass a bill that would allow the government to raise the debt ceiling only, a so-called clean bill.

He said there's no plan to deal with the debt we're facing.

There will not be an increase in the debt limit without something really, really big attached to it, he said.

Obama's Treasury Secretary, Timothy Geithner said last week in a letter to Senate Majority leader Harry Reid that the U.S. would hit the $14.294 trillion debt limit by May 16 and said the Treasury could take extraordinary steps to postpone the date the U.S. would default on its obligations until July when there would not be no headroom to borrow within the limit.

On Sunday, Plouffe called raising the debt ceiling a process.

[I]n that process we should be able to reduce the deficit, he said. So we should not be playing brinksmanship with the full faith in credit of the United States of America.

On the same program, Rep. Paul Ryan, R-WI, who also serves as Chairman of the House Budget Committee said he noticed a shift in the administration's stance.

I'm pleased with what David Plouffe just said because I think that was a policy change, Ryan said.

Tim Geithner has always been saying he wants just a standalone debt ceiling increase. We've never been in favor of that. Now he's saying things can go as a part of this. So, we believe, accompanying any debt ceiling, you need real fiscal reforms. Real spending cuts and real spending controls going forward so we can deal with the debt in the future.

The Republican proposal for the 2012 budget unveiled last Tuesday would spend $3.559 trillion, compared with Obama's mid-February $3.729 trillion proposal, a difference of $170 billion.

The deficit in 2012 under the Republican plan would be $995 billion. The deficit under Obama's plan would be $1.101 trillion.

Over the span of a decade, Republicans say their plan will reduce the federal budget deficit by a total of $4.4 trillion, compared with the Obama proposal of $1.1 trillion.

Republicans faulted Obama in mid-February for not leading on taking on the challenges facing the federal government's spending on health, retirement, and energy.

Reid recently said that the Republican 2012 budget counter-proposal unveiled by Ryan last week was proof that Republicans have declared war on Medicare and Social Security.

The Republican's plan is a boon to insurance companies at seniors' expense, Reid said. The irresponsible Republican proposal will force seniors to pay more for health care at the same time that it gives tax breaks to millionaires and billionaires and protects government giveaways to big oil companies and corporations that ship American jobs overseas.

Obama's view of the 2012 budget and the nation's budget needs for the years ahead is that for the U.S. to compete globally and win, there need to be investments in the areas of education, infrastructure, and innovation, such as spending for scientific research and development.

On Monday, White House spokesman Jay Carney said Obama has shown that he is committed to deficit reduction, citing last year's health care reform legislation with its deficit reduction built into it and Friday's deal to cut $38.5 billion from current spending levels.

[W]e do not need to play chicken with our economy by linking the raising of the debt ceiling to anything. We should do that right away, Carney said.

When Obama's budget proposal was unveiled in-mid February, Senate Minority Leader Mitch McConnell called it unserious and irresponsible.

In response, Reid said that the U.S. would have the money it needs if Congress ended tax breaks and subsidies to oil companies, a move which Republicans have said would amount to a tax increase.

Plouffe predicted on Sunday the negotiations on the debt ceiling would be a tough fight.

[W]hat we need to do at the same time, in the months ahead, is we've got to decide--and it's going to be a tough fight--how are we going to reduce the deficit, get on a more sustainable fiscal trajectory, but in a way that doesn't compromise our ability to grow the economy or create jobs?