Temporary debt limit hike possible
Senate Minority Leader Mitch McConnel has indicated that it is possible that the White House and Republicans will kick the debt ceiling can down the road a couple of months if both sides are unable to come to an agreement.
McConnell said on Sunday the ceiling could be raised enough to last a few months so that negotiations can continue on a larger deal that would include changes to so-called entitlement programs like Medicare.
"The president and the vice president, everybody knows you have to tackle entitlement reform," McConnell said on CBS's "Face the Nation."
"If we can't do that, then we'll probably end up with a very short-term proposal over, you know, a few months. And we'll be back having the same discussion again in the fall," McConnell said.
Vice President Joe Biden is leading negotiations with congressional Democrats and Republicans who are trying to agree on how to narrow huge budget deficits and raise the debt limit so the United States can avoid defaulting on its financial obligations and keep borrowing money to pay its bills.
Biden and top Democratic and Republican lawmakers aim to reduce the country's stubborn budget deficits by $4 trillion over the next 10 years in order to give lawmakers the political cover to raise the debt ceiling.
Delay benefits the Democrats. The closer we get to 2012, the less likely that broad, deep cuts in entitlements will be forthcoming in any deal. Why McConnel would countenance a temporary measure is puzzling. The only thing I can imagine him thinking is that the economy will worsen between now and the fall, and that it will put pressure on Democrats to deal on Medicare and Social Security. It is widely assumed - at least by professionals on Wall Street and around the world - that a failure to raise the debt ceiling will have a disastrous effect on world markets and is likely to push the American economy back into recession.
That may nor may not be the case. No one knows the answer which makes a temporary rise more attractive for politicians who hate the idea of having to make an unpopular vote close to an election.