Negotiations likely will resume tonight, but no deal has been struck yet in Washington to raise the nation’s debt ceiling.
Senator Johanns says not reaching a deal has real consequences. During a conference call with reporters, he paints a scenario of what might happen that first week in August if the debt ceiling isn’t raised.
“There will be six times in August that we’ll be in the marketplace asking people to give us their dollars or their Yuan or whatever it is to buy out debt,” Johanns says, “and they’re going to say, ‘Wait a second here, you’re not paying all your bills. I want higher interest rates.’”
Johanns says the federal government must get its budget under control or raising the debt limit will only buy the nation a little bit of time. Johanns says any debt deal has to make reductions in federal spending.
“This isn’t workable,” according to Johanns. “When you have to borrow 40 cents on every dollar to pay Social Security recipients, something is seriously, seriously wrong.”
Johanns counters those who contend that not raising the debt ceiling invites fiscal disaster. He contends that the current rate of federal spending is inviting disaster.
“At some point, if we don’t get this straightened out, the roof comes down around our heads anyway,” Johanns says. “This only buys time in my personal opinion.”
Republicans, such as Johanns, have been pushing for deep budget cuts in exchange for their vote to raise the $14.3 trillion limit on borrowing. President Obama and Democrats have been pushing for an end to Bush-era tax breaks.