Is the Budget Deal Ushering in an Age of Austerity for the US?

In two back-to-back televised addresses to the nation Monday night, both President Obama and House Speaker John Boehner put forth their priorities and expectations of a budget deal to address the US debt ceiling deadling. Was their rhetoric basically admitting the US faces an age of austerity?

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In his 15-minute address from the White House, Obama pushed for “shared sacrifice” in a debt plan that would both cut federal spending and institute higher taxes for the wealthy and large corporations. He criticized Boehner’s plan that would “kick the can” down the road by requiring another vote to raise the debt ceiling in the near future. Boehner’s plan would include deep spending cuts but limit increases to the debt ceiling, the main area of contention between his plan to cut $3 trillion from the budget and Senate Majority Leader Harry Reid’s proposal.

While the Senate has been more bipartisan in debt discussions of late, the House remains fairly divided among party lines. Boehner’s approach is unlikely to garner much support among House Democrats, and so he’ll have to rely on a large majority of his own party. However, Boehner’s plan met conservative opposition Monday from Rep. Jim Jordan (R-Ohio), who vowed to only increase the debt ceiling if Congress sends each state a constitutional amendment requiring a balanced budget.

Reid has been working to modify Boehner’s plan to make it more agreeable to his own party and the president, who has said he would veto any plan that only provided for a short-term increase in the debt ceiling. Both Reid’s and Boehner’s plans include budget cuts for federal agencies but do not include increases in tax revenue or severe cuts to entitlement programs.

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Boehner’s plan allows for an increase in the debt ceiling of up to $1 trillion, paired with $1.2 trillion in spending cuts, with a bipartisan committee of 12 lawmakers appointed to come up with an additional $1.8 trillion in savings to be submitted to Congress for approval in the next few months.

Reid’s plan also creates a 12-member committee and would institute spending cuts to outweigh the increase in the debt ceiling. It too includes the $1.2 trillion in spending cuts to the Pentagon’s budget present in Boehner’s proposal, but allows for $1.5 trillion more in savings than Boehner’s plan.

In his address last night, President Obama urged for a quick resolution that satisfied all parties, but that most importantly prevented the government from going into default. He outlined for the public the ramifications of Congress not reaching an agreement to raise the debt ceiling by the Treasury’s August 2 deadline. He said that, if the government weren’t granted more spending power, it would be unable to make payments on Social Security and veterans benefits, “Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis — this one caused almost entirely by Washington.”

Obama opposed Boehner’s plan that would leave the issue up to another vote within months because it would leave the people uncertain about the future of the economy, facing the threat of another standoff that could result in default. Boehner did less to outline his plan than did Obama, instead focusing on the state of negotiations. Until last Friday, Boehner and Obama were working together on a plan that could gain support in both the House and the Senate when Boehner walked out, ending their negotiations for a “grand bargain”.

Though bipartisan discussions have broken down, any plan presented before Congress must receive significant bipartisan approval, with the House led by Republicans and the Senate led by Democrats. So far all of the bills being proposed have support on both sides, but neither has enough.