Government Hits Debt Ceiling as Parties Squabble

Sooner or later the two parties have to come to some sort of agreement on the debt ceiling.

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In contrast, the Democrats have done their best to avoid boxing themselves in on the debt fight. After a meeting with the 53 Senate Democrats and President Obama Wednesday afternoon, Senate Majority Leader Harry Reid said that the president urged the party to remain united, but flexible. While few Democrats have ruled out spending cuts, many are saying that they must come with measures to increase revenues, either through higher taxes or by eliminating tax loopholes and credits. Sen. Kent Conrad, the chairman of the Senate Budget Committee, talked about a equal split between cuts and revenue during a caucus meeting with fellow Senate Democrats on Tuesday. Hoping that public anger over gas prices will give them an edge on the issue, Democrats are also pushing for the elimination of $4 billion in oil and gas subsidies as a first step towards common ground.

Finding a deal that keeps both sides happy without finding a way to increase revenues may prove impossible. As the official negotiations continue, many in Washington are keeping on eye on the so-called gang of six negotiations in the Senate, a bipartisan group of senators looking to craft legislation based on the recommendations from last year's presidential fiscal commission, which has not yet seen an up or down vote in Congress. The commission, which recommended raising revenues through making deep changes to entitlement programs and eliminating most tax credits, is seen as a possible way to build consensus around the idea of tax hikes. "Revenue is on the table," said one Senate aide close to the negotiations. If the group is able to find common ground based on the fiscal commission's recommendations—which include corporate tax reform to raise revenues, along with reforms to entitlement programs—then it may be a strong foundation to build a deal to raise the debt limit and make substantial budget reforms.

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