The administration of US President Barack Obama says budget negotiators in Congress would probably fail to strike a far-reaching deal unless Republicans agree to raise revenues and overhaul the tax code.
A 29-member bipartisan congressional committee, which includes House and Senate budget negotiators, is working to come up with a proposal for 2014 budget. The talks are centered on finding ways to cut spending and special interest tax breaks to replace automatic across-the-board spending cuts.
“I don't want to get ahead of the budget conferees," Treasury Secretary Jack Lew told a business panel, saying the lawmakers could produce something “small, medium or large,” according to Reuters. But if Republicans don't embrace tax reform and higher revenues, “then something large is not likely,” Lew has said.
The negotiators have about a month to write a compromise federal budget they are saying they're not close to an agreement with Republicans rule outing tax increases while Democrats saying any major entitlement reform is not an option.
US was on the verge of a debt default in October but its politicians reached at last-deal to end, temporarily, a dilemma over raising the debt ceiling after fierce bipartisan fight over the country’s budget. The deal ended a political crisis that partially shut down the federal government. It only offered a temporary fix by extending the debt ceiling until February 7. Meanwhile, the government’s spending extension will expire on January 15, raising the threat of another government shutdown.
The Paris-based Organization for Economic Co-operation and Development (OECD) has warned that a possible US government default “would have extremely severe effects.” The Organization’s chief economist, Pier Carlo Padoan, has said “Brinkmanship over fiscal policy in the United States remains a key risk and uncertainty.”