The RP’s Budget Crisis Update- July 25

Senate Majority Leader Harry Reid has created the most recent effort at a budget deal that can pass both Houses of Congress and be signed by the President.

In a Sunday afternoon conference call with House Republicans, Speaker Boehner urged his caucus to stand firm in budget negotiations while acknowledging that compromise and a bill that can pass both houses of Congress will be necessary. For their part, Democrats including President Obama, Senate Majority Leader Harry Reid, and Treasury Secretary Tim Geithner still refuse to accept a deal that includes only a short-term debt ceiling increase, which House Republicans continue to push. [National Journal]

Mark Warner has called for the Senate to vote on the budget reduction plan put forth by the Gang of Six, a bipartisan coalition of which he is a member. Since its release a week ago, the plan has largely fallen by the wayside in favor of dueling plans by House Republicans and Senate Democrats. The Gang’s plan, through cutting defense spending, reforming entitlements and closing tax loopholes, would reduce the deficit by $9 trillion over the next decade. [The Hill]

Facing a Republican Party that is unwilling to share its debt-reduction plan or get behind any existing plans, Harry Reid is drafting a plan that will cut the deficit by $2.7 trillion dollars. While the plan includes raising the debt ceiling through 2013, as President Obama and other Democrats have demanded, it trims the deficit without raising revenues, as Republicans have demanded. [Politico]

President Obama is refocusing his administration on bridging the gaps between Democrats and Republicans, a major theme of his 2008 campaign that may be used to boost his appeal to independent voters in the 2012 election. In particular, he is working to break the partisan logjam surrounding debt ceiling and deficit negotiations, a goal which, if achieved, would likely improve the President’s image as far as the economy is concerned. [Washington Post]

According to a poll by The Hill, US voters are highly skeptical about the ability of Congress and the President to reach a deal on the debt ceiling: 71% say that they have little or no confidence in the government’s ability to do as much. Among Democrats, 47% have some level of confidence that a deal will be reached, while only 11% of Republicans agree. A slim majority (51%) believe Congress is too unwilling to compromise, while 35% believe it is too willing to do so, with Republicans being more likely than Democrats and independents to believe that Congress is too willing to compromise. [The Hill]

Speaking on MSNBC this morning, New York Democratic Senator Chuck Schumer referred to Majority Leader Harry Reid’s plan as something that House Republicans should be able to get behind and end the stalemate over debt reduction plans. He lauded its extension of the debt ceiling through 2013 while noting that it meets the major Republican criteria of not raising revenues and having a 1:1 spending cuts to debt ceiling increase ratio. [Huffington Post]

The Dow Jones Industrial Average opened about 125 points (one percent) lower on Monday, reflecting skepticism about the ability of Congress and President Obama to reach a deal on the debt ceiling before August 2. This drop is in line with similar declines in Asian markets Monday, includingJapan’s Nikkei, which fell be 0.81 percent, and the Shanghai Composite, which closed down about three percent on Monday. As a result of the declines, economists in Asian countries have been calling on the United States to effect swift action on the debt question. Drops in European markets have been less marked; as of Monday morning on the East Coast, the SIX Swiss Exchange was down 0.25 percentage points while the FTSE in England had barely dropped, by about 0.01 percent. [Politico]

Speaking in the economic powerhouse city of Shenzhen, Secretary of State Hillary Clinton reassure Chinese officials that the American economy is sound and in no real danger of defaulting on its loans. In doing so, she stressed that the United States will not give up on its role as a major power in the Asian political and economic affairs. [Huffington Post]

Still confused as to what all of this means?  Want to find out how you can have your voice heard on this issue?  Click here to read The RP’s “Debt Ceiling for Dummies.”