President Obama and the Democrats are trying to cut a deal for a temporary increase of the debt ceiling.
(Reuters) - President Barack Obama and Senate Democrats are weighing a scaled-back U.S. budget deal that would avert a looming default but force Congress to tackle the politically toxic issue again before the 2012 elections, a Senate Democratic aide told Reuters on Thursday.
The deal would cover the country's borrowing needs for seven months, the aide said. That would theoretically include budget savings of roughly $1 trillion to attract the Republican support needed to pass it through Congress.
At this point in time, this seems to be the most likely to happen option.
The Republicans know that their positions are wildly unpopular, but they have backed themselves into a corner by repeatedly pledging to cut spending and never raise taxes.
A temporary increase would provide both parties with a way out of their fox-holes, of which the GOP's is much deeper, and I wouldn't be shocked to see a temporary increase again in another seven months since that will be right in the middle of the Republican primary season.
It remain's to be seen if the proposed $1 trillion in cuts would be over a span of five or ten years, and what revenue increases would accompany it, but a temporary increase with minimal side effects would surly be preferable to a paralyzing credit freeze which would push the country back into recession for years or maybe even the rest of this decade.
Because the Republicans have control over the House of Representatives, and with it the power to make demands and block legislation, we're going to feel pain either way this goes. The question is how much pain.