WASHINGTON – A key GOP negotiator in talks on lifting the government's borrowing cap said Tuesday that it may take more than a decade to accumulate savings to pay off the approximately $2.4 trillion in new debt needed to keep the government afloat for about a year and a half.
Sen. Jon Kyl, R-Ariz., also said that he believes any agreement to raise the so-called debt ceiling — and avoid a market-rattling, first-ever default on U.S. obligations — should be enacted sometime next month, before an Aug. 2 deadline. Kyl is a participant in top-level talks aimed at producing spending cuts to pass in concert with the debt limit increase.
"A debt ceiling increase is only over roughly an 18-month period of time. The savings could play out (over) more than a decade," Kyl told reporters. The time frame is important because spreading the cuts over a longer period means that they would be less severe than if they were imposed over a decade, as is typical for legislation considered by Congress.
Kyl's comments came as House Majority Leader Eric Cantor, R-Va., told his GOP colleagues that he's "cautiously optimistic" that ongoing budget talks led by Vice President Joe Biden will produce an agreement on budget cuts at least as large as the accompanying increase in the government's ability to borrow.
Cantor, R-Va., representing the Republican-controlled House, told fellow lawmakers in an email Monday that the Biden-led group is scrubbing all of the major spending programs of the federal budget for potential savings, including health care programs for the elderly and the poor.
Speaker John Boehner, R-Ohio, has put forth a marker that any increase in the so-called debt limit should be matched by spending cuts at least equaling the new level of permitted borrowing. The national debt has reached the current $14.3 trillion cap, but the Treasury Department is juggling government accounts to free up enough money to prevent the government from defaulting on its obligations until Aug. 2.
"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," Cantor wrote. He didn't say over what time period the cuts would be measured.
Biden said last month that the group, which includes top lawmakers from both parties, is on pace to generate savings exceeding $1 trillion. At the White House last week, President Barack Obama predicted to House Democrats that the Biden group would come up with perhaps 60 to 70 percent of the requisite budget cuts and that he and Boehner would negotiate the remainder.
The Biden group is slated to have its sixth meeting Thursday at the Capitol. Kyl said the topics will include revenue increases sought by Democrats and a proposal to cap spending at a fixed percentage of the economy, say 20 percent. Republicans have promised to block any revenue increases, however, and the administration opposes the spending cap.
Cantor didn't explicitly mention the Medicare health program for the elderly — which is currently the subject of a pitched political battle and a rallying point for Democrats — but other top Republicans like Senate Minority Leader Mitch McConnell of Kentucky insist that cost cuts to the program be part of any final agreement.
A controversial House GOP plan to turn Medicare into a voucher-like program for future beneficiaries is rigorously opposed by Democrats, but Obama himself has proposed cuts to Medicare providers.
Cantor made no mention of cuts to Social Security, and the topic is not believed to be part of the talks.
The government borrows an average of about $125 billion a month. The administration hasn't said how big of an increase in the debt limit it would like, but a key consideration is whether to raise it enough to get through next year's elections. But that would require a borrowing increase of well more than $2 trillion.
"Even to go to the end of the year next year, you'd have to go to $2.4 trillion," Kyl said. "Which means that you have to do about 2 1/2 trillion — at a minimum — in savings."
On Tuesday, the Congressional Budget Office estimated that the government has run a $936 billion deficit over the first eight months of the budget year that ends Sept. 30.
