Will Two Sides Reach a Deal Before August 2nd?

According to Treasury Secretary Timothy Geithner, politicians in Washington need to get a debt ceiling done by August 2nd in order to avoid a default.

Geithner has gone on record as stating that the failure to get a deal done by August 2nd would be a "catastrophe" for the United States. It's tough to disagree with him.

Well, it's currently July 11th and a deal still hasn't been reached. This leaves a little over three weeks to get a deal done, which is a fact that hasn't been lost on the media. Over the past week or so, media outlets have really cranked up their coverage of the debt ceiling debate, and you can expect this trend to continue as we make our way towards August 2nd.

According to the Republican side, the two major reasons that they have not agreed to a deal as of yet:

1) "The Democrats continue to insist on raising taxes"

2) "The Democrats are just not serious enough about fundamental entitlement reform"

These words came straight from the mouth of House Speaker John Boehner earlier today.

The Democrat side, on the other hand, insist that they don't want to raise taxes. Instead, they argue, they are seeking to "close certain tax loopholes".

House Majority Leader Eric Cantor clearly disagrees with that assessment, saying that Republicans "didn't come hear to raise taxes" and that any agreement has to be "revenue-neutral". Republicans have said that they don't want to raise taxes on the people who are expected to create new jobs in the country.

The Republicans have insisted on creating a plan that deals with the deficit and debt issues before they will vote in favor of a debt ceiling increase. The two sides don't disagree over the fact that the debt ceiling must be increased - instead, they are currently haggling over the deficit/debt reduction plan.

On Saturday, Boehner claimed that the only "politically viable" solution to resolving this issue was to agree on a "mid-size" package of reforms that would include roughly $2 trillion in savings.

Obama, on the other hand, disagreed with that theory earlier today, saying that "we have to pull of the Band-Aid" and "eat our peas". The "pull off the Band-Aid, eat the peas" deal is the $4 trillion, 10-year deficit-reduction plan that Boehner walked away from over the weekend. Obama stated earlier today that he will continue to push the "largest possible deal" that he can and that he won't agree to a short-term extension of the country's debt limit.

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You will be hard-pressed to find a person who actually thinks that the two sides won't be able to agree to a deal before August 2nd. In between now and then, there will be plenty of posturing from both sides, but in the end, a deal will be reached. Neither party wants to know what is on the other side of a debt default.

Filed under: General Knowledge