After daily meetings between President Obama and Congressional leadership from both parties, no compromises were reached between those who oppose cutting entitlements (Medicare, Medicaid, and Social Security) and those who oppose tax increases. President Obama gave Congressional negotiators until Saturday morning to come up with a budget plan to raise the $14.3 trillion debt ceiling. Meanwhile, Senate Minority Leader Mitch McConnell (R-KY) proposed a contingency plan to allow the President to raise the debt limit in successive steps to avert defaulting on our national debt starting on August 2nd. Under the McConnell plan, the Administration would seek three increases in the debt over the next year and a half. Along with each request for additional borrowing authority, the Obama Administration would submit a set of budget cuts.
On Friday, House Republican leaders shifted course and announced that they would vote on a “cut, cap and balance” bill instead of the vote on the balanced budget amendment bill that had been planned. According to press reports, the “cut, cap and balance” bill will contain spending cuts, spending caps that limit federal spending to 18% of Gross Domestic Product (GDP), a debt limit increase, and a requirement for passage of a balanced budget amendment before raising the Nation’s debt ceiling.