Congressional Republicans on Thursday abandoned budget talks aimed at clearing the way for a federal debt limit increase, leaving the outcome in doubt as they vowed not to give in to a Democratic push for new tax revenues as part of any compromise.
.....Mr. Cantor had previously expressed optimism that the sessions could produce a deal. But he announced he would not be attending Thursday’s scheduled meeting because Democrats continued to press for part of the more than $2 trillion savings target to come from moves like phasing out tax breaks.
“As it stands, the Democrats continue to insist that any deal must include tax increases,” Mr. Cantor said in a statement. “There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.”
Senator Jon Kyl of Arizona, the No. 2 Senate Republican and the party’s other representative in the talks, said later Thursday that he would also skip the next negotiating session as he and Senator Mitch McConnell of Kentucky, the Republican leader, turned up the pressure on President Obama to play a larger role in the push for a debt limit deal.
OK -- let's do something really radical right now like look at data and facts.
1.) Treasury debt is bench mark debt -- meaning it forms the foundation of the fixed income market. To play with this market in anyway invites extreme, economically dislocating problems.
2.) The US is running a trillion dollar plus deficit. That means the only way to solve the problem is with a combination of spending cuts and tax increases. Neither solution in isolation will solve the problem; it's mathematically damn near impossible.
3.) The GDP equation is very clear: government spending contributes to economic growth. And as the CBO clearly illustrates in its historical budget data, government spending has accounted for between 19% and 23% of US GDP for the last 30 years.
This is an utterly pointless situation at this point.
In case you're wondering, I still think Bernanke has the best solution for the current situation.
