Debt talks yield little; Obama rules out stopgap

Pres­i­dent Barack Obama meets with Repub­li­can and Demo­c­ra­tic lead­ers regard­ing the debt ceil­ing Mon­day in the Cab­i­net Room of the White House in Wash­ing­ton. From left, House Minor­ity Leader Nancy Pelosi of Calif., House Speaker John Boehner of Ohio, the pres­i­dent, and Sen­ate Major­ity Leader Harry Reid of Nev. (Asso­ci­ated Press | Charles Dharapak)

ANDREW TAYLOR

BEN FELLER

Asso­ci­ated Press

WASHINGTON — Pres­i­dent Barack Obama and con­gres­sional lead­ers on Mon­day emerged still deeply divided over how to slash the nation’s debt, with real­ity sink­ing in that even a middle-ground pro­posal was not big enough to suc­ceed and would not get through Con­gress anyway.

As time runs per­ilously short for action, Obama chal­lenged top law­mak­ers to return to the White House on Tues­day with fresh ideas for a debt-reduction plan that could pass the House and Sen­ate. All sides are scram­bling to reach a deal as part of a trade­off in which Con­gress would agree to extend the nation’s debt limit by Aug. 2 to pre­vent a cat­a­strophic gov­ern­ment default on its bills.

Turn­ing up the pres­sure, Obama declared that he would reject any stop­gap exten­sion of the nation’s bor­row­ing limit, implor­ing law­mak­ers once again to reach one of the most siz­able debt-reduction deals in years.

He refused to even enter­tain a backup plan if that doesn’t happen.

“We are going to get this done,” Obama insisted in a news conference.

In a 90-minute closed meet­ing, House Major­ity Leader Eric Can­tor spelled out poten­tial spend­ing cuts that had been iden­ti­fied in talks led for weeks by Vice Pres­i­dent Joe Biden. But Demo­c­ra­tic law­mak­ers in the room made clear such a cutting-only approach with­out tax hikes on wealth­ier Amer­i­cans would never pass the Democratic-led Sen­ate or the House, where Demo­c­ra­tic votes would be needed, too.

It did not appear, either, that such a plan would meet the House Repub­li­cans’ own stan­dard of a debt-cutting pack­age. They want cuts that would exceed the size of the increase in the debt limit, which could be about $2.4 tril­lion to get the coun­try through 2012 and next year’s elections.

Repub­li­cans won’t sup­port a pack­age that raises any taxes.

As the stale­mate con­tin­ues, the pres­sure increases. A gov­ern­ment default could trig­ger another enor­mous eco­nomic swoon.

Demo­c­ra­tic offi­cials famil­iar with the White House posi­tion in the pri­vate talks insist that lead­ers of the House and Sen­ate will not let that hap­pen, and that Repub­li­cans ulti­mately would vote to raise the debt limit even if a deficit-cutting pack­age does not come together in time.

Yet Repub­li­cans say oth­er­wise. House Speaker John Boehner insists the House can’t pass such a bill.

“I agree with the pres­i­dent that the national debt limit must be raised, and I’m glad that he made the case for it today,” Boehner told reporters. “But the Amer­i­can peo­ple will not accept — and the House can­not pass — a bill that raises taxes on job creators.”

Obama renewed his case for a pack­age that would put a his­toric dent in the country’s deficits by blend­ing polit­i­cally poi­so­nous ele­ments for both par­ties: tax hikes for the wealthy and big cor­po­ra­tions opposed by Repub­li­cans and social ser­vice cuts that Democ­rats decry.

He implored both polit­i­cal par­ties to give ground and show the Amer­i­can peo­ple that Wash­ing­ton can actu­ally work.

“If not now, when?” Obama said.

By all accounts, Obama’s third meet­ing with House and Sen­ate lead­ers in under a week pro­duced lit­tle movement.

Can­tor did most of the talk­ing for Repub­li­cans, aides said, out­lin­ing up to $2.3 tril­lion in spend­ing cuts over the upcom­ing decade, with $1.3 tril­lion com­ing from squeez­ing the day-to-day bud­gets of Cab­i­net agen­cies includ­ing the Pentagon.

Can­tor erred on the high end of the sav­ings range in vir­tu­ally every instance. The White House coun­tered that the cuts really added up to more like $1.7 tril­lion, which would leave nego­tia­tors $700 bil­lion short of the $2.4 tril­lion being sought and no bipar­ti­san way to make up the gap.

Democ­rats sug­gested that most spend­ing cuts be con­cen­trated in the later years of a deal, but a Repub­li­can aide said GOP law­mak­ers took issue with that sug­ges­tion and want the cuts to begin right away.

Obama spent most of his time encour­ag­ing law­mak­ers to recon­sider a big­ger deal, on the order of some $4 tril­lion in spend­ing cuts and tax hikes over 10 years. Democ­rats famil­iar with the talks said the meet­ing pro­duced a clearer recog­ni­tion that the lead­ers were going to have to go back and think again about how to find a compromise.

Obama has offered to enter­tain rais­ing the Medicare eli­gi­bil­ity age from 65 to 67 years if Repub­li­cans make com­pro­mises, includ­ing let­ting tax cuts for wealthy Amer­i­cans expire at the end of 2012, accord­ing to a Demo­c­ra­tic con­gres­sional aide.

Yet the path to an accord remained hard to see. Can­tor told reporters ear­lier in the day: “We are not going to raise taxes. That’s all.”

All the offi­cials famil­iar with the talks spoke on con­di­tion of anonymity to dis­close details of the pri­vate discussions.

Obama told reporters he would meet with the law­mak­ers every day until an agree­ment is reached. They have two weeks or less to do so in order to get any deal through Con­gress in time. He asked law­mak­ers to return to the White House on Tues­day at 3:45 p.m. EDT.

Obama tried to alter the debate by say­ing in his news con­fer­ence that any poten­tial tax increases on wealth­ier peo­ple would not take effect until 2013. Notably, that would fall after the next election.

The pres­i­dent said he would refuse to accept stop­gap leg­is­la­tion of a few months to keep the nation from default­ing. “It’s not going to get eas­ier; it’s going to get harder,” Obama said. “So we might as well do it now. Pull off the Band-Aid. Eat our peas.”

More broadly, Obama sought to posi­tion him­self as the prag­ma­tist seek­ing a com­pro­mise in a divided town.

To Repub­li­cans, he said they have long pushed deficit reduc­tion as the way to cre­ate des­per­ately needed jobs and now won’t take yes for an answer. “Where are they?” he said.

And to Democ­rats eager to pro­tect enti­tle­ments, Obama said doing noth­ing is not tenable.

“So, yeah, we’re going to have a sales job,” he con­ceded. “This is not pleasant.”

Obama made clear Mon­day that any changes to Social Secu­rity would be designed to ensure money is avail­able for ben­e­fi­cia­ries years from now — as opposed to trim­ming costs to reduce the deficit. One pos­si­bil­ity would lower cost-of-living increases for recipients.

Many Democ­rats deeply oppose that idea. As to why that would be included in debt talks, Obama said it all came back to politics.

“If you’re going to take a bunch of tough votes,” he said, “You might as well do it now.”

Posted by AP News on Jul 11 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.