Financial Services Regulatory Reform Update - June 17, 2011

As the August 2nd deadline to increase the debt limit draws nearer, the “Biden group,” has redoubled its efforts. The group recently increased the number of meetings scheduled and will be meeting three times a week for the remainder of June in an attempt to draft deficit reduction legislation for consideration before the July 4th recess, as noted in last week’s update, and will likely meet four times in the coming week.

In remarks to the press after the group’s meeting on June 14th, Vice President Biden said that they are beginning to get “down to the real tough stuff.” Biden went on to say that he is “confident” that the group will reach an agreement that raises the debt limit and makes progress toward reducing the deficit. House Majority Leader Eric Cantor (R-VA) echoed Biden’s remarks, saying that a sense of urgency has produced “very substantive” discussions on the deficit.

The discussions from the group’s most recent meeting on June 15th focused on controlling spending through automatic spending cuts and tax increases. Rep. Chris Van Hollen (D-MD), a member of the group, said that there is broad support within the group for “a mechanism that ensures deficit reduction” such as spending caps that trigger automatic cuts. Van Hollen also reported that Democrats laid out for Republicans a “menu of options” designed to diminish tax expenditures to corporations. Some of these options included: ending oil and gas subsidies, closing special interest tax code loopholes and ending tax breaks for corporate jets. According to aides, other issued discussed at this meeting included discretionary spending and a possible extension of payroll tax breaks to stimulate the economy.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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