Tuesday, June 21, 2011

High Time for Republicans, Democrats to agree fiscally

Business Times - 22 Jun 2011


High time for Republicans, Democrats to agree fiscally

By LEON HADAR
WASHINGTON CORRESPONDENT

WASHINGTON'S two leading political rivals made history over the weekend when they decided to leave their differences behind and work together to win a major victory.

Indeed, US President Barack Obama and the Republican Speaker of the House, John Boehner, playing a golf match as a team on Saturday, defeated Vice-president Joseph Biden and Republican Ohio governor John Kasich. It was only a friendly game of golf, but the event seemed to have acquired some political overtones. Observers wonder if the opposing Democratic and Republican sides facing each other in a long and exhausting legislative fight will be able to agree on a deal over the US federal budget.

The White House said in a statement that the president and Mr Boehner defeated their counterparts on the 18th hole, each winning US$2. 'The foursome had great time and really enjoyed playing golf,' the statement said, adding that after their round at Joint Base Andrews, the four politicians went to the patio of the clubhouse where they enjoyed 'a cold drink, some of the US Open (golf tournament) coverage and visited with service members'.

Golf is a very popular game in Washington and Democrats and Republicans tee off together quite frequently. There is even something called the Congressional Golf Task Force. The game helps build relationships between political opponents which could become critical when they try to reach a compromise over legislation, such as whether to raise the US$14.3 billion US debt ceiling, an issue on which lawmakers will have to decide by the August deadline or face the prospects of a new economic recession and a collapse of the US dollar, with all its ramifications for the global economy.

The pairing of Mr Obama and Mr Boehner in the same team and thus avoiding the question of whether the President or the Speaker shot a better round could be regarded as the kind of creative idea that Republicans and Democrats will need to come up with very soon in order to allow the US Treasury Department to borrow more money and prevent the federal government from going bankrupt.

But the real negotiations are probably not going to take place on the golf course but in Washington's two centres of power - on Capitol Hill and in the White House - where Biden and a group of Congressional Democratic and Republicans negotiators are trying to devise a deal on the debt limit which they promised to conclude by July 1. But the Republicans are continuing to insist that any deal on raising the debt limit will have to be preceded by a bipartisan agreement on controlling federal spending in the short term and for a coherent strategy for slashing the budget deficit in the long term.

The political and legislative reality is quite simple. The Republicans control the House while the Democrats have a majority in the Senate. Hence when it comes to the issue of the debt limit and the corresponding budget problems, nothing is going to happen unless the two sides can make a deal.

That explains why the 12 spending bills for fiscal year 2012 that the House has been working on and expected to pass in the House are going nowhere since there is no chance that the Senate will adopt them.

No one is seriously expecting that the members of the bipartisan Congressional group that Mr Biden has assembled will succeed in bridging their wide ideological differences that reflect major policy differences - Republicans want to cut government spending on social and economic programmes and reduce taxes; Democrats demand more cuts in defence spending and raising taxes on the wealthy - by the end of this month.

The deal that will emerge from the current discussion will probably not be written into legislation but will commit both sides to make enough cuts in the budget as well as to changes in the tax law that will allow the raising to the debt limit by the August deadline - just before Congress leaves town for the summer recess.

And when lawmakers return to Washington in September, expect them to start making some serious movements on deficit reduction, by dealing with politically sensitive issues such as the ailing national insurance programme (Social Security) and other government-backed social and health programmes for the poor and the elderly. The controversial ideas of raising the retirement age and changing the entire tax system will also be debated.

Indeed, reports that even the powerful lobbying group for old folks, the American Association for Retired People (AARP), may be dropping its long-standing opposition to making cuts in Social Security benefits, is an indication that everyone in Washington is starting to take seriously the warnings made by the rating agencies. Finally it seems, the time may have come for Americans to put their fiscal house in order.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

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