Debt ceiling disaster looms. Debt limit fight.

O`DONNELL: Good evening from New York.

This afternoon, President Obama met with the Senate Democratic Caucus to discuss a path forward on the budget, deficit reduction and a vote on the debt limit. The president is expected to meet with Senate Republicans tomorrow.

Also, today, the chairman of the president`s Council of Economic Advisors, Austan Goolsbee, said in a speech to the Chicagoland Chamber of Commerce, “To tie deficit reduction to the debt limit in my view is quite insane. If we hit the debt ceiling, we default. It`s like trying to lose weight by cutting off your head.”

But, congressional Republicans are insisting on linking deficit reduction to the debt limit. Here`s House Majority Leader Eric Cantor talking about the debt limit at a news conference this morning.

(BEGIN VIDEO CLIP)

CANTOR: I started off the week with a visit to the New York Stock Exchange, and while there, talked to many individuals engaged in our capital markets, investors, traders and the rest. The message that I heard was: keep at it, don`t back down, cut spending, reform entitlements and make sure we get our fiscal house in order. And in particular, they were focused on the issue before us as far as increasing the debt ceiling in this country. What I heard and what I believe is, it is reckless for us to increase the credit limit of this country without cutting spending, without reforming entitlements, without getting our fiscal house in order.

(END VIDEO CLIP)

O`DONNELL: That is a new belief for Eric Cantor. Eric Cantor did not believe it was reckless to increase the credit limit of the country without cutting spending, reforming entitlements or getting our fiscal house in order when he voted multiple times to raise the debt limit when President Bush was in office. It is either reckless to increase the debt limit without cutting spending or it isn`t.

Nothing reveals the emptiness of Congressman Cantor`s words more than his own voting record on the debt limit.

Joining me now is independent Senator Bernie Sanders of Vermont, a member of the Senate Budget Committee who met with President Obama today.

Thank you for joining us tonight, Senator Sanders.

SEN. BERNIE SANDERS (I), VERMONT: Good to be with you.

O`DONNELL: Senator, what happened in that meeting with the president today?

SANDERS: Well, I don`t know that it`s useful to talk about what happened at a private meeting. What I can say is that many of us are sick and tired of seeing this country being blackmailed by Republican demands. These people are apparently willing to plunge the entire world into a financial crisis by not lifting the debt ceiling if they don`t get their way.

And I think enough is enough. They blackmailed us in terms of shutting down the government. They blackmailed us in December about extending unemployment benefits. And I am sick and tired of that. I think the American people are as well.

We need a good debate on the budget, but we don`t need blackmail.

O`DONNELL: Have you found in these meetings a way around this blackmail, which I think is the perfect word for what`s going on in the House of Representatives?

SANDERS: Lawrence, I think the answer is, yes. I think that every poll that I have seen suggests that the American people want shared sacrifice in helping us reduce a very serious deficit problem.

They think it is — makes no sense at all that at a time when the wealthiest people in this country are doing extremely well and while the middle class has been really hurt by the recession that you give huge tax breaks to the wealthy and you cut back on programs that the middle class desperately needs like Medicare, Medicaid, Pell grants, et cetera. People want shared sacrifice, which means that the wealthiest people who have enjoyed hundreds of billions of dollars in tax breaks, who have seen their effective tax rate go down to the lowest level in recent history, they`ve got to pony up. They`ve also got to help out in deficit reduction.

Corporations that make billions in profits and pay nothing in taxes, you know what? They also have to corporate.

We need shared sacrifice not simply massive cuts in programs for low and moderate income Americans.

O`DONNELL: Senator Sanders, there seems to be confusion in the public, generally, about what the debt ceiling is and what it does. It does not incur any new debt. It simply accepts the fact that debt has been incurred over the last 10 years, over the recent times, and that this is a way of assuring that the debt that has been incurred will actually be paid. It`s paying our bills.

SANDERS: Exactly.

O`DONNELL: It`s fiscal sanity.

Do you think you have enough time between now and the moment when the debt ceiling will have to be raised sometime this summer to actually get the public educated to the point where there can be that political pressure brought on Republicans to get this thing done?

SANDERS: Lawrence, I think the answer to that is absolutely, yes. I think the word has got to go out that in fact for the first time — here`s what you are saying in English — for the first time in the history of this great country the United States will not be paying its bills. We will default. We will be a deadbeat.

And everybody knows that will have huge international consequences on international finance. It will raise interest rates in this country. It could perhaps bring about a depression worldwide.

I think what we have got to do is put pressure on the Republicans and say to them, you can`t do this. Yes, we`ve got to have a debate about the budget. But you can`t blackmail the president of the United States and the American people in catastrophic terms unless you get your way.

We`re tired of bullying. We`re tired of babies saying give it to us all or else we`re going to wreck the whole house. I don`t think that is what the American government should be about.

O`DONNELL: Senator, I would to put up on the screen a chart of what`s happened with the debt ceiling over the last decade from 2001 to 2008. It`s been raised several times. It`s had to have been raised.

And as I say as we talked about here, it doesn`t in any way increase spending. It simply acknowledges that the government has done this spending already. That the government has committed to this spending.

And it takes legislation to change the spending — the debt ceiling has nothing to do with incurring one additional dollar of spending.

SANDERS: That`s correct, Lawrence. And again, I think we need a good debate about how we move toward deficit reduction. But you cannot hold hostage the American people by refusing to raise the debt ceiling.

The other point that I would make is I think if you look at polls out there, the American people have a pretty good idea about how they want to move toward deficit reduction and it is certainly not the Republican plan.

People want us to take a hard look at military spending. Start bringing the troops home from Afghanistan. Start closing some military bases around the world that we may not need to maintain anymore. Do away with corporate loopholes. Ask the wealthy to start paying their fair share.

So, there are ways that we can move toward a balanced budget that are fair and responsible, not simply do it on the backs of the sick, the elderly, the children and the poor.

O`DONNELL: Senator Sanders, we`re going to discuss military spending and the possible drawdown in Afghanistan with Congressman Kucinich in another segment. But given that we have now gotten Osama bin Laden, do you think that affects the possibilities of military spending cuts in a way that we haven`t — we wouldn`t have been able to achieve before getting Osama bin Laden?

SANDERS: I mean, that`s hard to say, Lawrence. My own view before and after the killing of bin Laden is that after 10 years of war in Afghanistan, after spending this year perhaps $100 billion, the time is now for the Afghan government and the Afghan military to defend themselves. I think we can`t leave tomorrow. I think we`ve got to support their military and their police.

But I think we need to move out of Afghanistan as quickly as we possibly can.

O`DONNELL: Senator Bernie Sanders, independent of Vermont — thanks for joining us tonight.

SANDERS: Good to be with you.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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