By Erik Wasson - 06/08/11 12:01 AM EDT
Republicans want a short-term increase to the debt ceiling if the talks led by Vice President Biden do not produce sufficient spending cuts, Senate Minority Whip Jon Kyl (R-Ariz.) said Tuesday.
Kyl, who is representing Senate Republicans in the high-level talks, said his caucus largely agrees with House Speaker John Boehner’s (R-Ohio) demand that the increase in the $14.3 trillion debt ceiling be paired with even bigger spending reductions.
Negotiators in the Biden talks are looking for a way to increase the debt ceiling enough so that it does not need to be raised again until the end of 2012, after the next election. Kyl said that timeline would require a debt-ceiling increase of $2.4 trillion.
But Kyl said the GOP would look to a shorter-term increase in the debt ceiling if the talks fail to produce more than $2.5 trillion in cuts.
“If we can’t get about two and a half trillion in real savings, then I don’t think there’d be much of an appetite on our side to raise the debt ceiling by $2.4 trillion,” he told reporters Tuesday.
Kyl said the spending cuts could take effect over 10 years or more.
The Biden talks convene for the sixth time on Thursday. Kyl said the meeting would focus on two contentious issues: revenue increases and spending caps.
“We will talk about something the vice president wants to talk about, which is revenue, and we will talk about something that we want to talk about, which is how to constrain spending in the future,” he said.
The Arizona Republican said the GOP intends to raise the idea of a spending cap along the lines of the 20.6 percent of GDP hard cap proposed by Sens. Bob Corker (R-Tenn.) and Claire McCaskill (D-Mo.). The White House favors a debt failsafe trigger that would force spending cuts or tax increases if the size of the debt is not shrinking compared to the size of the economy.
On revenue, Kyl said he does not think the Biden talks will be able to produce an agreement on comprehensive tax reform. Speaking on May 25, Treasury Secretary Timothy Geithner said he believes overhauling the tax code should be taken up after the debt-ceiling crisis is averted.
“I don’t believe we have the capability to do that in these negotiations with Vice President Biden. It is probably something the Ways and Means Committee and the Finance Committee will be involved in. And I am hoping we can do that later this year,” Kyl said.
Kyl declined to comment on what healthcare entitlements were being discussed, but said the talks “could get some long-term savings to a program like Medicare, and that would send a very strong signal to the markets.”
In a Monday email to colleagues, House Majority Leader Eric Cantor (R-Va.), another member of the Biden group, revealed that talks are moving into a discussion of cuts to healthcare entitlements.
Cantor told fellow House Republicans he is “cautiously optimistic” that the talks will yield spending cuts in excess of the amount by which the debt ceiling will be raised.
“As you know, Speaker Boehner has indicated that any increase in the debt limit ought to be accompanied by at least a commensurate reduction in the deficit. While discussions are still ongoing (and will continue this week), I am cautiously optimistic we can find sufficient common ground with the administration to enact spending cuts that meet the goal outlined by the Speaker,” he said in the email, obtained by The Hill.
Cantor said that in addition to the five meetings of the seven members of the Biden group, staffers have met “countless” additional times.
“Together, we have been going through all the major spending areas of the federal budget, beginning with non-healthcare mandatory programs and continuing with discussion on the healthcare entitlement programs,” he said. “We are also discussing discretionary spending and long-term budget process reforms that will hopefully prevent a repeat of the explosion of federal spending we have witnessed over the past several years.”
Cantor did not mention Medicare by name, nor the GOP budget, which would turn Medicare into a system of federal subsidies for private insurance companies. And he didn’t address the issue of tax increases, though GOP leaders have made clear they will not put taxes on the table — something Democrats have demanded.
Senate Majority Leader Harry Reid (D-Nev.) did not respond to a question Tuesday about whether a shorter-term debt-ceiling increase would be acceptable. A Democratic aide said they would not negotiate on the debt ceiling through the media.
In addition to Cantor, Kyl and Biden, Sens. Max Baucus (D-Mont.) and Daniel Inouye (D-Hawaii) are participating in the talks, as are Reps. Chris Van Hollen (D-Md.) and James Clyburn (D-S.C.).
The Treasury Department has demanded an increase to the debt ceiling by Aug. 2, and Boehner has called for talks to wrap before July 4.
Kyl said the Boehner timeline would be tough to meet, given the current pace.
“We’d have to hustle more than we are hustling,” he said. “We’d need to get it done sometime in July.”