STEVE CHIOTAKIS: Later this afternoon, Vice President Joe Biden meets with a bipartisan group of Congressional leaders. They're all gonna try to carve out a compromise to raise the government's debt limit. The government already bumped against the ceiling last week although the Treasury Department is manipulating available cash to keep paying the bills through August.
Marketplace's John Dimsdale is with us live from Washington with more. Good morning John.
JOHN DIMSDALE: Good morning Steve.
CHIOTAKIS: So here we are. The clock is ticking. Where are we in negotiations?
DIMSDALE: The Biden group has found some savings already. For example agreeing to cut the
government's contribution to federal employee pension accounts. But they still have a long way to go. Today, for example they'll take up the tough decisions needed to reduce the government health care plans Medicare and Medicaid. And remember, there's also an effort going on in Senate-- the so-called Gang of Five, downsized from the Gang of Six. They are trying to reach a broader agreement -- not only raising the debt ceiling, and finding spending cuts but perhaps also reaching a budget deal for next year.
CHIOTAKIS: What are the prospects of that Joh,?
DIMSDALE: This bipartisan group is keeping quiet about whether they're making any progress. But their job is about to get more difficult. This summer the government will have to approve additional spending to pay for all the rebuilding from the tornadoes and floods in the Midwest.
Maya MacGuineas with the Committee for a Responsible Federal Budget says disasters like these happen almost every year and the budget should anticipate them.
MAYA MACGUINEAS: So instead of acting surprised and 'Oh we have to raise additional funds outside the normal budget process' we should actually be budgeting for emergencies in the normal cycle.
Macguineas says this extra spending will be just going to be one more hurdle, one more roadblock in the way of reaching a deficit-cutting budget deal before the summer is out.
CHIOTAKIS: And if there's no agreement to raise the debt ceiling by early August, remind us of the consequences?
DIMSDALE: The government won't be able to borrow money to pay its bills. Most significantly, it couldn't pay interest on the debt it already has. And that means that investors in U.S. debt, meaning the folks who buy Treasury bonds, would get skittish and the government would have to pay higher interest rates to borrow more money in the future.
CHIOTAKIS: Marketplace's John Dimsdale in Washington for us.
DIMSDALE: My pleasure.
JEREMY HOBSON: Vice President Joe Biden meets this afternoon with congressional leaders from both parties for the fourth time. They're trying to find a compromise to raise the government's debt limit. We hit that $14.3 trillion limit last week though the Treasury Department is doing some fancy accounting work to buy a couple more months of negotiating time before a national default.
Our Washington Bureau Chief John Dimsdale is with us live with more on this story. Good morning.
JOHN DIMSDALE: Good morning.
HOBSON: Well first where do things stand right now on these negotiations going on?
DIMSDALE: Well the Biden group reportedly has found some savings by agreeing to cut the government's contributions to employee pension accounts. But you know with eight or nine weeks still to go before the actual drop dead default date neither side seems to be negotiating in earnest yet. There's also that Gang of Five bipartisan senators still trying to come up with a compromise despite loosing one of their republican members. But there's not much sign of cooperation there.
Maya MacGuineas at the Committee for a Responsible Budget still thinks that they're the group most likely to come up with long lasting reforms to entitlements for example.
MAYA MACGUINEAS: Without the Gang of Six or Five or some thing like that -- a bipartisan group that's really focused on fixing the entire problem, I think it will be harder to accomplish that very important task.
HOBSON: Harder to accomplish the task -- John this all sounds pretty depressing I have to say. Not a lot of progress here.
DIMSDALE: Not only is there very little progress, the government may be about to dig the hole of debt even deeper. Even anti-spending Republicans acknowledge that there's going to have to be an extra spending bill sometime this summer to cover the additional government expenses for disaster relief. It could be another billion dollars.
HOBSON: For those tornadoes and floods that are going on. Marketplace's John Dimsdale in Washington, thanks.
DIMSDALE: Thank you.