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Financial Planning > College Planning > Student Loan Debt

House Republicans Meet With Obama Over Debt Limit

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House Republicans met with President Barack Obama at the White House Wednesday morning to discuss how raising the debt ceiling would impact everything from the nation’s economy, to job creation, to health care.

The meeting comes a day after the House defeated a bill to raise the debt limit by $2.4 trillion. The 318-97 vote to reject Obama’s call to increase the $14.3 trillion debt limit is being billed by Republicans as proof that Congress will not vote to increase the debt limit without significant spending cuts.

House Majority Leader Eric Cantor, R-Va., said in comments after Wednesday's meeting that “Today’s meeting gave us an opportunity to express concerns that we have about the current situation in the economy.” Cantor went on to note that ADP issued a report on Wednesday estimating that private sector job creation amounted to 38,000 new jobs in May, which he said is “woefully short of the amount needed for us to see this economy get back on track and people get back to work. … I said to the President today, ‘It’s really important for us to focus on growth in this economy.’”

During the meeting, Cantor said Obama “was well aware and [the President] admitted the fact that private sector job creation is not enough, and [Obama] did mention that a lot of the losses were in the public sector.” Again, Cantor continued, “our message is focused on growth in the private sector, which is how we’re going to help bring down the deficit and get people back to work.”

In trying to get the nation’s fiscal house in order surrounding the debt limit vote, Cantor added that “it is very, very important for us to look at growth as part of the fix. We can bring the deficit down through added jobs, but we can also get people back to work.” Cantor also noted that House Ways and Means Committee Chairman David Camp’s, R-Mich., efforts toward a tax reform plan.

Cantor said that he asked Obama to work with House Republicans “to keep out of the discussions surrounding the debt limit and in [Vice President Joseph] Biden’s talks any notion that we’re going to increase taxes.” Cantor said: “It’s counterintuitive to believe that you increase taxes on those individuals and entities that you are expecting to create jobs.”

Indeed Rep. Nan Hayworth, a freshman Republican from New York, told AdvisorOne in an interview that where she sees a potential “impasse” between the House GOP and Obama moving forward regarding the debt limit is taxes. “The President seems to be convinced that

raising taxes is part of the [deficit] solution, and [the majority of] House Republicans feel strongly that raising taxes would be part of the problem.”

Hayworth also noted her support for House Budget Committee Chairman Paul Ryan’s, R-Wis., comments to Obama that the President had engaged in “demagoguery” in discussing GOP plans to overhaul Medicare.

Senate Finance Committee Chairman Max Baucus, D-Mont., plans to hold a hearing on June 7 to examine the extent to which revenues can or should play a role in the ongoing deficit reduction effort.

Baucus and the witnesses at the hearing, entitled “Perspectives on Deficit Reduction: Revenues,” will discuss how to strike a balance between spending and revenues to reduce the deficit in a healthy manner. Baucus noted in a press release announcing the hearing that “tax revenues as a percent of GDP are currently low as compared to historical averages, while federal spending as a percent of GDP, in the wake of the recession, remains elevated.

The release also stated that in addition to informing the deficit reduction effort, “the topics discussed during the hearing could become a part of Chairman Baucus’s ongoing work to reform the tax code by making it simpler and fairer for the average taxpayer and more pro-growth.”


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