Spotlight On Debt Talks As Federal Grants Wait In The Wings

July 7, 2011 | By Liza Casabona | Post a Comment

Today was the big day. President Obama met again with Congressional leaders to try and wind down debt talks as the Treasury Department’s Aug. 2 deadline approaches. Hanging in the balance are millions of grant dollars that could be impacted as negotiators consider spending cuts and other options to resolve associated discussions over how to get the country’s debt under control.

Although the Treasury deadline is specifically about raising the nation’s debt ceiling, it has begged questions about the nation’s spending habits, dragging along debates about the fiscal year 2012 budget and such mandatory spending programs as Social Security, Medicaid and Medicare.

It’s been impossible to avoid the headlines covering every detail of the war between Democrats and Republicans over whether and how to deal with the country’s ballooning debt. At a Twitter Town Hall held at the White House yesterday, Obama fielded several questions about the budget and the debt talks, reflecting public interest in how the negotiations turn out.

Earlier this week, the Washington Post ran a provocative editorial suggesting that the president invoke the 14th amendment to end the fractious negotiations, essentially declaring that the U.S. is constitutionally required to continue paying its bills. 

Not to be outdone, two Senate Republicans argued this week in a Wall Street Journal editorial that any debt deal should include a Constitutional amendment for a balanced budget. One of those senators, Sen. Jim DeMint, R-S.C., also asserted that the debt “crisis” is largely a White House fabrication.

As the deadline approaches, a range of groups have ratcheted up their calls for an end to the standoff. At the end of June, economists implored Congress to raise the debt limit. And the Coalition on Human Needs is currently running an action campaign urging advocates for low-income people to reach out directly to the White House to show support “for holding firm against damaging cuts.”

The debt crisis is complicated, with many moving parts and potentially far-reaching impacts if a deal isn’t reached or through the specifics of any deal that is reached. For a breakdown of what defaulting on the U.S. debt could mean, check out this clip from National Public Radio’s All Things Considered program.

It remains to be seen if Obama’s meetings today will move the ball forward in any meaningful way. It won’t be the president’s first attempt to step in when talks have fallen apart to try and broker an eleventh-hour deal; he waded into the budget talks for FY 2011 a few months ago. Obama set a rough two-week deadline to finish the debt talks and negotiators are scheduled to sit down again over the weekend, meaning that the only certain thing right now is that we’re likely to continue to see the talks dominate the news reports from Washington for the near future, while federal agencies and those who rely upon grant dollars continue to wonder what it may mean for them.


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