WASHINGTON (Reuters) - Vice President Joe Biden and top lawmakers will meet for a seventh time on Tuesday to try to reach a deal that would reduce the United States’ spiraling debt and increase the U.S. borrowing limit.
The Treasury Department says Congress must raise the $14.3 trillion debt ceiling by August 2 to avoid a potentially catastrophic default on its obligations, but both Republican and Democratic lawmakers say any increase must include measures to ensure the country’s debt remains at a sustainable level.
The debt-reduction debate is a sharp shift for Washington, which less than a year ago was focused on additional deficit spending to lower the unemployment rate.
Following is a timeline of the debate:
November 2, 2010 - Republicans win control of the House of Representatives on a promise to scale back government spending and tackle budget deficits that have hovered at their highest levels relative to the economy since World War Two.
December 1, 2010 - After nine months of talks, a bipartisan deficit reduction panel commissioned by President Barack Obama releases a report that advocates $3 trillion in spending cuts and $1 trillion in revenue increases -- mainly by closing loopholes in the tax code -- over 10 years.
January 2011 - Six Republican and Democratic senators, known as the “Gang of Six,” take matters into their own hands as they begin meeting to try to strike a long-term deficit reduction deal they can present to their parties.
February 19 - The House passes a budget for the current fiscal year that ends September 30 that would cut $61 billion from last year’s levels. The Democratic-controlled Senate defeats it one month later.
April 9 - Obama and congressional leaders bring the government to the brink of a shutdown before they agree on a budget for the current fiscal year that would cut $38 billion from last year’s levels. It is billed as the largest domestic spending cut in U.S. history, but an analysis by the Congressional Budget Office finds it would actually cause the government to spend $3.2 billion more in the short term.
April 13 - After Obama’s initial proposal is criticized as inadequate, the president lays out a new deficit-reduction plan that would save $4 trillion over 12 years, in part by accelerating health reforms. He also proposes that Biden lead bipartisan talks to find areas of common ground for a deficit-reduction deal.
April 15 - The House passes a budget for the next fiscal year that would cut spending by $6 trillion over 10 years. It proposes in part to privatize government healthcare plans for the elderly and the poor. That proves unpopular with many voters because it would increase costs for future retirees.
May 5 - As Biden and negotiators from both parties hold a first meeting, top Republicans say there will likely be no broad agreement on the main sticking points like tax reform and popular government-run healthcare programs.
May 9 - House Speaker John Boehner, the top Republican in Congress, says any increase in the debt ceiling must be matched by an equal amount of spending cuts. The Treasury Department estimates it needs at least $2 trillion to cover borrowing needs through the November 2012 presidential and congressional elections.
May 10 - Senate Budget Committee Chairman Kent Conrad, a Democrat, floats a plan that would rely equally on tax hikes and spending cuts to save $4 trillion over 10 years, in a bid to win the liberal support needed to bring it up for a vote. He eventually abandons the effort.
May 11 - House Republicans release a spending plan for the coming fiscal year that has its deepest cuts in education, labor and health programs cherished by Democrats.
May 16 - The United States reaches its $14.3 trillion debt limit. The Treasury Department begins tapping other sources of money to cover the government’s bills.
May 17 - The “Gang of Six” talks falter as a leading conservative, Republican Senator Tom Coburn, drops out due to an impasse over healthcare.
May 22 - House Budget Committee Chairman Paul Ryan, a Republican, and Senate Republican Leader Mitch McConnell both say they would be open to a compromise on health benefits, one of the biggest obstacles to a budget deal.
May 24 - Democrats win an election to fill an open seat in a conservative New York district and attribute the victory to public unease with the Republican health plan.
May 25 - Senate Democrats force a vote on the Republican health plan in a bid to force Republicans to say whether they support it. Republicans still overwhelmingly back the measure, but it fails in the Democratic-controlled chamber.
May 31 - The House of Representatives rejects a measure to raise the debt limit in a vote staged by Republicans to pressure Obama to agree to accompanying spending cuts. Senior Democrats decry the vote as a political stunt, although 82 Democratic lawmakers join Republicans in defeating the bill.
June 9 - In a sixth meeting of the Biden group, Treasury Secretary Timothy Geithner argues that tax increases need to be part of the equation, but Republicans remain unmoved. As With Obama and Boehner calling for the group to wrap up its work by July 4, negotiators agree to step up the pace of their talks.
Reporting by Andy Sullivan; Editing by Ross Colvin and Cynthia Osterman