Budget

A day after being named to the Biden deficit talks, House Majority Leader Eric Cantor (R-Va.) on Wednesday called on President Obama to better define the goals of the negotiations and not use the talks to play politics.

He said this week’s warning from the Standard & Poor’s rating agency shows that the talks have to produce results, Cantor said.

“It is so important that the latest iteration of the president’s fiscal commission be a serious and sincere effort to manage down our debt and foster long-term economic growth, and not serve as yet another arena for political theater,” he said.

Republicans for the last week have sought to portray Obama as playing partisan politics with the deficit issue, ever since Obama unveiled a blistering attack on the House 2012 budget resolution, which calls for changing Medicare into a type of voucher system.

House Majority Leader Eric Cantor will be the House GOP representative; Senate Minority Whip Jon Kyl will represent Senate Republicans.

Liberal firebrand Rep. Dennis Kucinich (D-Ohio) told ratings agency Standard & Poor's to butt out of the nation's deficit conversation on Tuesday in a press release titled "Kucinich Downgrades Rating of Standard & Poor’s."

“No nation, agency or organization has the authority to dictate terms to the United States Government,” said Kucinich.

The S&P on Monday revised its outlook on U.S. government bonds, which enjoy the highest AAA rating, from "stable" to "negative." It said it worried Democrats and Republicans will be unable to agree on a deficit-cutting package before the 2012 election. The outlook revisions indicates the S&P may downgrade the rating on U.S. bonds within the next two years if the debt is not reined in.

Kucinch argued Tuesday that S&P along with other credit agencies were negligent in assessing the risks of investments prior to the 2008 financial crash, so they should not be taken seriously now.

“S&P and its compatriot Moody’s were a direct cause of the near collapse of the economy of the United States. That industry should be subject to greater oversight, regulation and fundamental overhaul as Washington gets serious about the deficit,” he said.

Rather than being "held hostage" by Wall Street, the U.S. should immediately end wars in Iraq and Afghanistan and military action in Libya, as well as impose more taxes on the wealthy, he said.

"We need to reform our monetary policy which allows unaccountable banks and agencies to exercise inexcusable amounts of power over our economy," he added.

Mainland China, the largest holder of U.S. government debt, on Tuesday said it hopes the United States will enact responsible deficit-cutting measures in light of a warning Monday from the Standard & Poor's rating agency over the trajectory of the country's government debt.

S&P revised its outlook Monday on the U.S. Treasury bond rating of AAA from "stable" to "negative," meaning there is a one-in-three chance the rating will be downgraded in the next two years.

China holds about $1 trillion of U.S. federal government bonds.

"We hope that the U.S. government will take practical measures under a responsible policy to protect the interests of investors," China's foreign ministry spokesman Hong Lei said in a statement on the ministry's website, adding that China has noted the S&P warning.

"I can't afford to have all of you as bystanders," Obama told students at Northern Virginia Community College.

The Treasury secretary also called on Congress to authorize a considerable increase in the debt ceiling, possibly by $2 trillion.

When it comes to confronting budget deficits, Americans are much more in favor of raising taxes on the wealthiest than cutting Medicare or Medicaid, a new poll found.

The McClatchy-Marist poll, conducted as Democrats and Republicans were touting their own long-term budget visions, also found the country largely pessimistic about America’s direction.

GOP says report is a wake-up call; administration says it underscores need for bipartisan deal.

Vice President Biden is scheduled to host a deficit-reduction get-together with lawmakers on May 5, the White House announced Monday.

President Obama, in his deficit-reduction speech last week, called for leaders from both parties and congressional chambers to appoint members to a group of lawmakers working with the vice president on deficits. The panel has a goal of working out a deficit-reduction framework by the end of June.

Top Democrats in both chambers have already made appointments to the group, with Sen. Max Baucus (D-Mont.), Sen. Daniel Inouye (D-Hawaii), Rep. James Clyburn (D-S.C.) and Rep. Chris Van Hollen (D-Md.) all expected to take part. 

For their part, some Republicans have ripped the president for proposing yet another commission.

Austan Goolsbee, the chairman of the White House Council of Economic Advisers, reiterated the administration line Monday that the debt ceiling would be raised, despite grumblings from some Republicans. 

Speaking on MSNBC, Goolsbee stressed that increasing the debt limit and negotiations over long-term deficit reduction were on “parallel but separate” tracks.

“We're going to raise the debt limit. We're going to meet our obligations. That's not a question. We can do these things in parallel,” Goolsbee said, echoing similar comments made over the weekend by Treasury Secretary Timothy Geithner.