Two Issues to Watch: Gas Prices or Raising the Debt Ceiling

May 3, 2011 05:06


Republicans only need to point to the price of gasoline and food. There is a direct co-relation between the rising price of commodities and the declining popularity of the president. Obama says there is no “silver bullet” that can bring down the price of oil. Republicans point at all of the administration’s actions to regulate and tax further oil and gas companies.

The Americano

As Congress returns to work Monday from its Easter vacation, two issues will grab the headlines: What is one to do about the rising price of gasoline, which is edging ever closer to an all-time national record $4.11 a gallon? The other is an assessment of efforts by Republicans and Democrats to reach an agreement on the government’s jumbo-sized debt and if they will raise the debt ceiling.

Which one will prevail will be a strong indicator of what party has the most leverage with American voters at a critical economic time for the nation.

The White House and President Barack Obama would like people focusing on the national debt ceiling and Republican plans to try to control the annual budget deficit. They will try putting Republicans into a corner and make them out to be the party that wants to change the rules on Medicare for the elderly.

Republicans only need to point to the price of gasoline and food. There is a direct co-relation between the rising price of commodities and the declining popularity of the president. Obama says there is no “silver bullet” that can bring down the price of oil. Republicans point at all of the administration’s actions to regulate and tax further oil and gas companies.

With polls showing higher pump prices undermining Americans’ confidence in Obama’s economic leadership Republicans are keen to exploit an issue that could hurt the Democratic president’s chances of reelection in 2012.

According to Reuters, prices at the pump are edging toward an all-time record national average of $4.11 a gallon, overshadowing what the White House views as a more pressing problem — raising the level of how much the United States can borrow so that it can continue to pay its bills and avoid defaulting on its debt.

The House of Representatives and the Senate will be the battleground in the coming days as both parties seek political advantage in the debate over higher gasoline prices.

Reuters agrees with political pundits who say that the Republican-led House is expected to vote on expanding offshore oil drilling and speeding up the government approval process, while Senate Majority Leader Harry Reid, a Democrat, plans to introduce legislation ending tax breaks worth billions of dollars for major U.S. oil companies.

Still, that will just be a preliminary skirmish. Much bigger and potentially more serious fights loom ahead as Congress faces what to do on two dates rapidly approaching — May 16 and July 8. Reuters said the government risks defaulting on its debt unless some big solutions are found for government spending and tax policy over the long-term.

“I see it as a three-ring circus with the debt limit the center ring,” American University’s Patrick Griffin, a former legislative aide to President Bill Clinton, told Reuters.

The Treasury Department says Washington will breach the congressionally-set $14.3 trillion limit on borrowing by around May 16. By employing extraordinary measures, Treasury Secretary Timothy Geithner will be able to stave off a default, but only until July 8.

One possible agreement may come from the so-called “Gang of Six” – three Democratic and three Republican senators – who behind the scenes have been trying to craft a grand budget deal that might be approved by both parties.

“We’ve made enormous progress in that group. And I hope that we are able to announce an agreement soon,” Sen. Kent Conrad (D – N.D.) said on “Fox News Sunday:”

Political analysts hope that these senators working in private represent the best hope for a bipartisan deal. Many hoped that the group might unveil their plan this week, but Conrad did not give any indication of when they would make their plan public.

According to Reuters, the White House will host a dinner Monday for all the legislators working on the deficit debate. Many see this as a last effort to make nice before things get ugly.

Reuters added that lobbyists representing major U.S. manufacturers, Wall Street banks and other business groups are expected to send a letter to lawmakers this week warning them of the dire consequences of not increasing the debt-ceiling.

The Americano/Agencies



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