Dec. 2010: Report warns, it's time to 'put up or shut up'
Entitled, “The Moment of Truth,” a report by the National Commission on Fiscal Responsibility and Reform warns of a pending catastrophe, and offers ways to help. “After all the talk about debt and deficits, it is long past time for America’s leaders to put up or shut up,” the commission writes. “We do not pretend to have all the answers. We offer our plan as the starting point for a serious national conversation in which every citizen has an interest and all should have a say.”
Among the commission's proposals: a revised tax code for employer-sponsored health insurance and retirement savings and pensions.
In July, the Employee Benefit Research Institute released analysis indicating that if the tax treatment for employer-based health insurance is eliminated or cut as part of federal deficit reduction, workers would face an increase in taxes on a benefit that currently isn't taxed, and they may begin to question the value of keeping their workplace coverage. A movement toward state-based health exchanges due to this tax reform could lead employers to drop coverage all together.
(Photo: In this March 8, 2011 file photo, National Commission on Fiscal Responsibility and Reform, Co-Chairmen Alan Simpson, right, and Erskine Bowles, testify on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite, File))
Feb. 19, 2011: House approves $60 billion in budget cuts
By approving more than $60 billion in cuts, House Speaker John Boehner aimed to deliver on the Republican promise to slash federal spending and bring the deficit under control. Items approved in the budget included cutting off federal funds to Planned Parenthood, barring agencies from spending money on the new health care reform law, and limiting Environmental Protection Agency activities.
The Senate rejected the plan on March 9, a clue to Speaker Boehner to show more flexibility in budget talks with the White House and the Senate.
(AP Photo/J. Scott Applewhite)
April 2011: Government averts a shutdown
Republicans and Democrats released in April competing long-term plans for scaling back federal debt. Rep. Paul Ryan, chairman of the House Budget Committee released the GOP plan on April 5, and President Obama released his a few days later.
A flash point in both proposals was health spending. According to the Associated Press, Ryan would repeal Obama's signature health care overhaul and recast Medicare and Medicaid, while cutting Medicare spending by an additional $30 billion over the $500 billion cuts in projected increases in the new health care law. Obama would leave Medicare and Medicaid basically in their current forms, but cut at least $200 billion more from Medicare over 10 years and $100 billion from Medicaid.
In the midst of the Medicare war, an agreement on April 8 — the largest domestic spending cut in U.S. history — avoided a government shutdown just an hour before deadline and cut federal spending by a necessary $38 billion.
(Photo: In this April 13, 2011, file photo, House Budget Committee Chairman Rep. Paul Ryan, R-Wis. who said Tuesday, May 17, 2011, he will not run for the U.S. Senate seat being vacated by retiring Democrat Herb Kohl. (AP Photo/Carolyn Kaster, File))
May 2011: The U.S. hits $14.3 trillion debt limit
In May, House Republicans outlined a spending plan for the coming fiscal year, pressing for deep spending cuts. Despite Democratic objections, education, health and labor programs faced an average cut of 12 percent. House Speaker John Boehner wanted an equal amount of spending cuts in exchange for a raise on the debt ceiling.
Meanwhile, Democrat and Senate budget negotiator Kent Conrad brought forward a criticized plan that even fellow party members thought was too far right.
When the government hit its $14.3 trillion debt limit, the U.S. Treasury looked for alternative routes to pay bills, and bumped back the default deadline to August.
June 2011: Biden debt talks hit a wall
Strong on their no-tax increase stance, Republican lawmakers wouldn't falter to Democratic pleas that tax hikes are necessary to reduce the deficit.
Republicans declared an impasse in ongoing talks with Vice President Joe Biden, and on June 23, two key Republicans, House Majority Leader Eric Cantor and Senate Majority Whip Jon Kyl, walked out of negotiations.
The International Monetary Fund urged the U.S. to lift its debt limit soon in order to avoid a severe shock to global markets.
(Photo: Vice President Joe Biden talks to reporters just off the Senate floor after trying to bridge the gap between Republicans and Democrats in Congress on how to solve America's debt crisis, at the Capitol in Washington, Tuesday, May 24, 2011. (AP Photo/J. Scott Applewhite))
July 8, 2011: Dismal unemployment report puts pressure on debt talks
June’s unemployment report showed hiring slowed to a near standstill, and the unemployment rate soared to 9.2 percent, the highest rate of the year.
A grand bargain looked out of reach as Republicans rejected tax increases demanded by Democrats. House Speaker John Boehner called for a $2 trillion package based mostly on spending cuts.
Facing criticism, President Obama blamed the dismal jobs report on uncertainty over the debt ceiling, which had hindered hiring in the private sector.
"The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that will need in order to make additional investments to grow and hire," Obama said.
(Photo: A job seeker looks at a bulletin at the Texas Workforce Commission's Workforce Solutions of Greater Dallas job resource center in Richardson, Texas. (AP Photo/LM Otero))
July 17, 2011: Downgrade possible
By now, both Moody’s and Standard & Poor’s have warned of a downgrade to the U.S. credit rating, and Obama gives party leaders 24 to 36 hours to deliver a plan of action.
Senate Republican leader Mitch McConnell and Senate Democratic leader Harry Reid work on a fallback plan to allow Obama to raise the debt limit. The two senators hope to garner Republican support by including upfront spending cuts.
McConnell’s plan would authorize the president to request debt ceiling increases in three increments between now and the end of next year. The first would boost the debt limit by $700 billion and the next two by $900 billion each.
(Photo: Senate majority leader Harry Reid, D-Nev., right, and Senate minority leader Mitch McConnell, R-Ky., talk during a photo opportunity on Capitol Hill, Wednesday, Nov. 15, 2006, in Washington. (AP Photo/Manuel Balce Ceneta))
July 19, 2011: Gang of Six vs. Cut, Cap and Balance
Senate leaders, a bipartisan "Gang of Six," finally start to speak Obama's language. Hoping to trim the deficit by the requested $4 trillion over the next 10 years, the plan would repeal the CLASS Act, a long-term care program established under the last year's health overhaul and force up to $500 billion in cuts from federal health care programs over the upcoming decade, on top of $1 trillion coming from tax increase out of closing loopholes in the tax code.
While in the House, the tea party-backed "Cut, Cap and Balance" bill would deliver spending cuts and a $2.4 trillion raise on the debt ceiling - but only after a balanced-budget amendment.
President Obama threatened veto from the beginning of the House plan. When the House-passed GOP bill made it to the Senate, it was tabled.
(Photo: Budget Committee member Rep. Jason Chaffetz, R-Utah, right, talks about his "cut, cap and balance" plan proposed by tea party-backed House Republicans, during a news conference on Capitol Hill in Washington, Tuesday, July 19, 2011. From left are, Rep. Renee Ellmers, R-N.C., House Speaker John Boehner of Ohio,, Republican Conference Chairman Rep. Jeb Hensarling, R-Texas, and Chaffetz. (AP Photo/J. Scott Applewhite))
July 22, 2011: Boehner walks out
Concerns heightened as House Speaker John Boehner abruptly walked out of talks with President Obama. The two were reported to be discussing a $3 trillion deficit-cutting deal that angered many Democrats for not including enough tax hikes to offset spending cuts.
According to the Associated Press, the disconnect in the talks with the White House was "not because of different personalities but because of different visions for our country," Boehner said, and he announced he would now seek agreement with leaders of the Democratic-controlled Senate.
(Photo: House Speaker John Boehner of Ohio, center, walks with his chief of staff Barry Jackson, left, after making a statement on Capitol Hill in Washington about the break-down of debt ceiling talks with the White House, Friday, July 22, 2011. (AP Photo/Alex Brandon))
July 28, 2011: Two plans, no compromise
Rival plans by House Speaker John Boehner and Senate Democratic leader Harry Reid face less than four days to garner enough bipartisan support for a vote to make it to President Obama's desk.
The two-step proposal put forth by Boehner to raise the debt limit by $1 trillion while making cuts to federal spending of $1.2 trillion faces a couple of hurdles: it’s not enough for conservatives and both the Senate and Obama threaten to kill it.
The proposal by Reid appears to be leading the favor, as a CBO report credits the Senate bill with reducing budget deficits by about $2.2 trillion through 2021, nearly three times the $850 billion credited to the Boehner bill.
(Photo: The Capitol Dome is seen on Capitol Hill in Washington, Thursday, July 28, 2011, as House Republicans pressed ahead with a vote on a newly modified plan to stave off an unprecedented government default next week. (AP Photo/J. Scott Applewhite))