Factbox: What's on the table in debt talks
Jul 8, 2011, 4:02 a.m.
(Reuters) - President Barack Obama and congressional leaders meet at the White House on Thursday to resume stalled budget negotiations that aim to get the national debt under control and avert a looming default.
The Treasury Department has warned that it will run out of money to cover the country's bills if Congress does not raise the $14.3 trillion debt ceiling by August 2.
Though Democrats and Republicans have identified roughly $2 trillion in possible savings, they remain at loggerheads over many elements of the deal.
Following is a summary of the debate:
The two sides have tentatively agreed to limit the growth of the annual discretionary spending that covers everything from law enforcement to airport security and military operations.
Aides from both parties put the agreed-upon savings at between $900 billion and $1.3 trillion.
One key area of disagreement: Democrats want a guaranteed portion of those cuts to come from military spending, an idea Republicans don't like.
"The first obligation of the federal government is the national security of the people. If it takes a certain amount of money to ensure that, then that's how much money we need to come up with," Kyl told reporters.
Democrats with knowledge of the talks say some Republicans have been more open to including cuts in defense than in the past, but there was no agreement on an actual number.
The two sides have tentatively agreed to a number of cuts in benefit programs, which continue automatically from year to year unless Congress changes them. Democrats say savings in this area total $500 billion; Republicans say the total is closer to $600 billion.
Among the possible cuts:
- Change the way inflation is measured to slow the growth of retirement benefits and tax deductions which are linked to the inflation rate, which could save up to $300 billion.
- Scale back retirement benefits for federal workers.
- Charge higher premiums to unstable companies whose benefits are backed by a federal insurance program.
- Reduce farm subsidies.
- Limit awards in medical malpractice lawsuits.
- Require graduate students to pay interest on their federal student loans.
- Auction off underused frequencies of the electromagnetic spectrum.
- Sell excess property no longer needed by the government.
This issue is shaping up to be the most contentious area of the debate. Democrats insist that a deficit deal can't rely on spending cuts alone, while Republicans insist that tax increases must be off the table.
Democrats have targeted tax breaks that benefit specific industries or taxpayers totaling roughly $400 billion in savings. Republicans are reluctant to include these in the deficit-reduction deal as they would like to save them for a broader tax-code rewrite that would lower rates.
Still, some wiggle room may be possible after House Republican Leader Eric Cantor suggested that his party could agree to end some tax breaks as long as they were offset with tax cuts elsewhere.
- Limiting itemized deductions for the wealthy, which could bring in $293 billion in extra revenue over 10 years.