The bipartisan deficit-reduction talks led by Vice President Joe Biden grew more contentious Wednesday as Democrats and Republicans became increasingly entrenched on key issues, people familiar with the matter said.
Republicans are staunchly opposed to raising taxes, something Democrats believe must be part of any deficit-reduction plan. Many Democrats, meanwhile, oppose certain changes to entitlement programs like Medicare, but Republicans say these are the biggest drivers of the deficit and must be tackled.
One of the many sticking points appears to be over timing. The Federal Reserve and the Congressional Budget Office both reported yesterday that immediate cuts would weaken the already fragile recovery. Congressional Republicans say they don’t care and want immediate cuts anyway (perhaps because they’re trying to make the economy worse on purpose).
Complicating matters, Senate Democrats said yesterday the eventual deal “must include an effort to boost the flagging economic recovery alongside deep spending cuts sought by Republicans.” Also yesterday, 20 congressional Republicans said they would oppose any deal, regardless of any other circumstances, unless it includes “sharp and immediate spending cuts, new caps on annual spending and an amendment to the Constitution that would require Congress to balance the budget.”
In other words, there’s a growing contingent of congressional Republicans who are simply and plainly stark raving mad. This includes, by the way, 10 GOP senators — more than a fifth of the entire caucus.
Also keep in mind, if the talks break down, it’s not like other legislative endeavors. On most issues — immigration, energy, health care, etc. — if policymakers engage in negotiations, and the process fails, the bill dies and goes away for a while.
When it comes to the debt ceiling, if the talks fail, Republicans have vowed to cause a recession on purpose. If failure is an option, the consequences would likely prove catastrophic.