6A
NATION
| Wednesday, August 3, 2011
L AWRENCE J OURNAL -WORLD
DEBT-LIMIT DEAL
Peace pact proves to be short-lived as bill signed By David Espo
WASHINGTON — With scant time to spare, President Barack Obama signed legislation Tuesday to avoid an unprecedented national default that he said would have devastated the U.S. economy. But the truce with Republicans that defused the crisis seemed to be fading already. Wall Obama Street crumpled, dismayed by reports of new economic weakness and unimpressed by Congress’ prescription. The Dow Jones industrial average sank by 266 points, its eighth straight losing session, and biggest. The compromise deal to persuade GOP lawmakers to raise the federal debt limit — U.S. borrowing was to collide with it at midnight — will cut federal spending by $2.1 trillion or more over the next decade. But Obama immediately challenged Republicans to accept higher taxes on the wealthy in a second round of deficit cuts this fall. They adamantly refused to accept that idea during the past months’ dispute.
Work far from over A stern-faced Obama said at the White House that action to raise the debt limit had been essential but more — and different — steps were badly needed. “We’ve got to do everything in our power to grow this economy and put America back to work,” the president said, arguing forcefully for including revenue increases as well as spending cuts in the next round of efforts to trim huge government deficits. It was the same call the GOP successfully resisted in the bill just approved, and there was little evidence of a change in position. “The American people agreed with us on the nature of the problem. They know the government didn’t accumulate $14.3 trillion in debt because it didn’t tax enough,” said the party’s leader in the Senate, Mitch McConnell of Kentucky. Obama placed his signature on bill in the privacy of the Oval Office less than two hours after a bipartisan 74-26 vote in the Senate. The House approved the measure Monday night on a 269-161 roll call that also reached across party
Spending caps ● The measure would cut President Barack Obama and more than $900 billion over top congressional leaders have 10 years from the day-toreached an agreement on a day operations of Cabinet plan to pair an increase in the agencies whose budgets are nation’s $14.3 trillion borrowing passed each year by Conlimit with spending cuts and to gress. Caps such “discrecreate a special committee to tionary” spending at $1.043 recommend bigger savings for trillion in 2012, $7 billion a vote later this year. Highlights: below 2011 levels and $44 billion below an inflationDebt limit adjusted “baseline.” But ● The plan would immediwhile sounding harsh, the ately increase the debt limit measure represents a signifby $400 billion, with Obama icant $24 billion increase permitted to order another over even deeper cuts $500 billion increase this fall sought by tea party-backed unless both House and Senate Republicans controlling the override him by veto-proof House. margins; a third installment of After a near-freeze in 2013, between $1.2 trillion and $1.5 discretionary spending would trillion would be made availincrease by about 2 percent a able after enactment of year, which is sure to spark matching levels of additional infighting as defense hawks spending cuts recommended and backers of domestic proby a special joint committee grams wrangle over who gets of lawmakers. The full $1.5 the money. trillion could also be available It’s up to the Appropriations if Congress adopts and sends committees to allocate the money, picking winners and to the states for ratification a balanced budget amendment losers from programs and bureaucracies. to the Constitution. The Associated Press
lines and was sealed by a rap of the gavel by Speaker John Boehner.
Essential legislation The bill allows a quick $900 billion increase in borrowing authority as well as a first installment on spending cuts amounting to $917 billion over a decade. Without legislation in place by day’s end, the Treasury would have been unable to pay all the nation’s bills, leading to a potential default for the first time in history. Administration off icials warned of disastrous consequences for an economy that shows fresh signs of weakness on a near-daily basis as it struggles to recover from the worst recession in decades. The White House and congressional leaders said legislation was important to reassure investors at home as well as overseas, and also to preserving the nation’s AAA credit rating. Following passage of the debt deal, Moody’s Investors Service, one of the three main ratings agencies, said it was retaining its triple-A rating on U.S. bonds but with a negative outlook to show there is still a risk of a downgrade. Short-lived peace pact This week’s peace pact
between the two parties is unlikely to be long-lived. The bill sets up a powerful 12-member committee of lawmakers with authority to recommend fresh deficit savings from every corner of the federal budget. Politically sensitive benefit programs such as Social Security and Medicare will be on the table as the panel of six Republicans and six Democrats works against a Thanksgiving deadline. So, too, an overhaul of the tax code. Congress will have until Christmas to vote on the recommendations without the ability to make changes. As an incentive for Congress to act, failure to do so would trigger $1.2 trillion in automatic spending cuts, affecting the Pentagon as well as domestic programs. Even before the president signed the legislation, he and Republicans were maneuvering for political position on the next stage. “We can’t balance the budget on the backs of people who have borne the biggest brunt of this recession,” the president said, renewing his call for higher taxes on the wealthy. “Everyone is going to have to chip in. It’s only fair.” Senate Republicans say it will not happen.
son, but it was called off when Jennifer Tipton and Olivier Odom wanted to bring a representative from Campaign for Southern Equality, a gay rights organization. Dollywood park spokesman Pete Owens told The Knoxville News Sentinel that the park didn’t want to meet with the representative, who wasn’t at the park at the time of the
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Additional cuts ● The plan would also create a 12-person, House-Senate committee evenly divided between the political parties, and charged with producing up to $1.5 trillion more in deficit cuts over 10 years. This second wave of spending cuts would focus on socalled mandatory programs whose spending levels are set by formula. They include Medicare, the Medicaid health program for the poor and disabled, farm subsidies and federal retirement programs. Other ● The plan would also require both House and Senate to vote on a balanced budget amendment to the Constitution; establish “program integrity” initiatives aimed at stemming abuses in Social Security and federal health care programs; and preserve recent funding increases for Pell Grants for low-income college students by $17 billion over 2012-13, financed by curbs in student loan subsidies. “I’m comfortable we aren’t going to raise taxes coming out of this joint committee,” McConnell said in an interview with Fox on Monday. In a speech shortly before the vote, he predicted instead a renewal of the most recent struggle over spending cuts. The debt limit will have to be raised shortly after the 2012 election, he said, predicting that no president of either party will be “allowed to raise the debt ceiling without ... having to engage in the kind of debate we’ve just been through.”
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Dollywood officials respond to lesbian couple KNOXVILLE, TENN. — Dollywood officials have offered a refund to a lesbian couple after an employee asked one of the women to turn her Tshirt reading “marriage is so gay” inside-out to avoid offending others during a recent visit to the Tennessee theme park complex. Park officials were going to meet with the couple in per-
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