Schumer: Holding down debt ceiling plays with fire

Sen. Chuck Schumer (D-N.Y.) on CBS' 'Face the Nation,' April 10, 2011.

New York Senator Chuck Schumer (D) warned on Sunday that a congressional stalemate on raising the debt ceiling would be "playing with fire" - and that failing to raise the limit would severely damage the U.S. economy.

In an appearance on CBS' "Face the Nation" on Sunday, Schumer chided House Speaker John Boehner for stretching negotiations on the federal budget to the final hour, and argued that similar negotiating tactics if employed when debating the debt ceiling would hurt the U.S. economy.

"Speaker Boehner had to keep [budget] negotiations going to the last minute to show the Tea Party people he was doing everything he could," Schumer told CBS' Bob Schieffer, of last week's down-to-the-wire debate over funding the federal government through the end of the 2011 fiscal year. "You cannot do that with the debt ceiling. That is playing with fire - because if the markets believe we are not going to pay our debt, it could be a formula for recession or worse.

"I would urge both sides to take the threat of not renewing the debt ceiling off the table," he said. "It is highly irresponsible... It shows a lack of knowledge as to how our government works."

According to projections by the Treasury, the U.S. government is expected to hit its $14.3 trillion debt ceiling by the end of May. If Congress does not approve an increase to the limit, the federal government could default on its bonds for the first time in history, and Social Security and Medicare checks would likely see delays as a result of the government's inability to make payments to agencies.

"The president is going to come forward early and outline a plan" on decreasing the nation's long-term debt, Schumer said. "That's a good idea because it doesn't bring things down to the wire on the debt ceiling, but it also will show the great contrast with Paul Ryan's [budget] plan."

Republican Sen. Jeff Sessions, of Alabama, said President Obama was going to have to make major concessions to the GOP in order for House Republicans to approve a hike in the debt limit.

"We've got to talk about the systemic problem that we have," Sessions told Schieffer. "We limited how much debt congressional action that the country could assume. We reached that limit far sooner than we thought because the spending is surging out of control. So the question now is, should we raise it? And the American people are saying, 'Children, you've misbehaved. You've spent too much of our money.'

"I think through their elected representatives [the American people] will insist that we make some changes in how we operate the budget," Sessions continued.

Among the changes he suggested were passing a two-year budget, putting statutory caps on spending, and passing a constitutional amendment requiring the government to balance the budget.

"The president just can't waltz in and say, 'We're going to have a debt crisis if you don't raise the debt limit, Congress, and we're not going to have any changes and I'm not going to support any changes,'" Sessions said. "He's going to have to meet Congress halfway. Really, the American people halfway."

Still, he said, he thought Congress would ultimately approve the hike.

"I think eventually we'll raise that debt limit," said Sessions. "But if [Mr. Obama] thinks he can just do it without making any changes in the spending patterns we're on, it won't happen."

Schumer argued that Ryan's 2012 budget proposal for reducing the deficit - which the Republican Party unveiled last week - placed a disproportionately heavy burden on the middle-class, and said the president's plan would instead emphasize a "shared sacrifice" among the American people.

"The Ryan budget focuses on the middle class," Schumer argued. "You need to share sacrifice. And we believe that, for instance, defense cuts should be greater than Ryan proposed. There's waste there like everywhere else.

"Even more importantly, there has to be revenues. If you're going to reduce the deficit, how do you allow the oil companies to get huge subsidies based on a time when oil was $17 a barrel, not $100? How do you give tax breaks for multimillionaires and companies that send jobs overseas, and yet decimate middle class programs?

"It's got to be fair and across the board," Schumer insisted.

Sessions disputed the idea that the Republican plan would primarily hurt middle-class Americans - and said he was happy to see that Democrats were acknowledging that something needed to be done about the deficit.

"I deny that, that it's aimed only at middle class people," Sessions said. But, he argued, a number of issues - including entitlements - needed to be addressed. "The president's 2,000 pages he sent to us just a few weeks ago proposed no changes in Medicare, no changes in Social Security or Medicaid, and actual increases in discretionary spending, increases in taxes, and still increasing the debt even more than we were already on.

"So we're going to look at this and we'll discuss it, Chuck," Sessions added. "But I'm glad to see some sort of retreat and acknowledgment that the original proposal could do nothing is no longer on the table.

"The president is going to have to reach out early if he wants to get an early solution," Sessions said. "He cannot just do nothing."

Schumer denied that the president was doing "nothing."

"He's just not doing what Jeff wants," he added.