Obama: Still differences on debt, new talks Sunday

House Speaker John Boehner of Ohio lis­tens at left as Pres­i­dent Barack Obama speaks dur­ing a meet­ing with Con­gres­sional lead­er­ship to dis­cuss the debt, Thurs­day, July 7, 2011, in the Cab­i­net Room of the White House in Wash­ing­ton. (AP Photo/Pablo Mar­tinez Monsivais)

JIM KUHNHENN

Asso­ci­ated Press

WASHINGTON (AP) — Under an urgent dead­line, Pres­i­dent Barack Obama and con­gres­sional nego­tia­tors set their sights on the nation’s tax sys­tem and cher­ished ben­e­fit pro­grams Thurs­day in hopes of strik­ing a mas­sive bud­get deal to raise the nation’s debt ceil­ing. Obama said the two sides were still far apart and called every­one back to the White House on Sunday.

The pres­i­dent met with the eight top Repub­li­can and Demo­c­ra­tic con­gres­sional lead­ers for an hour and a half Thurs­day, hop­ing to bridge ideas held by the two sides — each con­sid­ered unten­able by the other. On Capi­tol Hill, Democ­rats appeared espe­cially rat­tled that the dis­cus­sions included pro­pos­als to cut spend­ing for Social Secu­rity as well as Medicare and Medicaid.

High-level talks, after drag­ging on for weeks, have entered a sus­pense­ful endgame. The shape of an agree­ment is still in doubt as the nation moves ever closer to an Aug. 2 dead­line to raise the government’s debt ceiling.

Obama pushed for an ambi­tious deficit reduc­tion plan of roughly $4 tril­lion, the biggest of three options he laid on the table. It would require size­able tax rev­enues, which many Repub­li­cans oppose, and spend­ing reduc­tions for enti­tle­ment pro­grams, opposed by many Democ­rats. But the idea of a poten­tially his­toric deal was well received by the meet­ing par­tic­i­pants, offi­cials said later, even though the details remained in dispute.

After the 90-minute ses­sion, Obama said Democ­rats and Repub­li­cans should be pre­pared to show their bottom-line demands when they return to the bar­gain­ing table for the rare Sun­day session.

The nego­ti­at­ing stakes are high. With­out a deal on deficit reduc­tion, Repub­li­can lead­ers say they don’t have enough GOP votes to increase the nation’s bor­row­ing author­ity, rais­ing the dan­ger of the first ever U.S. default on its debts when the cur­rent $14.3 tril­lion debt ceil­ing is tapped out.

“Every­body acknowl­edged that we have to get this done before the hard dead­line of Aug. 2 to make sure that Amer­ica does not default for the first time on its oblig­a­tions,” Obama said. “And every­body acknowl­edged that there’s going to be pain involved polit­i­cally on all sides.”

That leaves lit­tle time to agree on 10-year deficit reduc­tions of $2 tril­lion to $4 trillion.

The major clash cen­ters on how to reduce spend­ing on major enti­tle­ment pro­grams such as Medicare, Med­ic­aid and Social Secu­rity, all prized by Democ­rats, and on tax changes that would close loop­holes and end cer­tain cor­po­rate breaks. Repub­li­cans insist that any tax changes be used to lower rates on cor­po­ra­tions and indi­vid­u­als; Obama wants them also to gen­er­ate more tax revenue.

Increas­ing the debt ceil­ing through the end of 2012 — a date favored by the White House — would require autho­riz­ing about $2.4 tril­lion in addi­tional bor­row­ing. House Speaker John Boehner has insisted on a 10-year deficit reduc­tion fig­ure that, at a min­i­mum, matches the amount of addi­tional bor­row­ing. One aide to a law­maker in Thursday’s meet­ing said Obama made it clear he wouldn’t sign a bud­get and debt agree­ment that didn’t extend the debt ceil­ing until after the Novem­ber 2012 pres­i­den­tial election.

In the meet­ing, Obama told the lead­ers that they faced three options — a small deficit reduc­tion plan, a medium plan that would reduce deficits by $2 tril­lion over 10 years or a big agree­ment that would shoot for up to $4 tril­lion in deficit reduc­tions over the next decade. Obama indi­cated he pre­ferred the largest number.

In the meet­ing, Boehner and Sen­ate Minor­ity Leader Mitch McConnell of Ken­tucky backed Obama’s big­ger, more ambi­tious goal, said Demo­c­ra­tic offi­cials famil­iar with the talks. Their lieu­tenants, Sen­ate GOP Whip Jon Kyl of Ari­zona and House Major­ity Leader Eric Can­tor of Vir­ginia, indi­cated they believed the medium-size option was more real­is­tic. Both Can­tor and Kyl had par­tic­i­pated in talks led by Vice Pres­i­dent Joe Biden that had already iden­ti­fied about $2 tril­lion in deficit reduction.

The nego­ti­a­tions are polit­i­cally dif­fi­cult for both parties.

Rais­ing the debt ceil­ing is unpop­u­lar with vot­ers, espe­cially those who vote Repub­li­can, increas­ing con­cern among GOP law­mak­ers that they could be chal­lenged by fel­low Repub­li­cans in pri­maries across the country.

The big enti­tle­ment pro­grams such as Social Secu­rity, Medicare and Med­ic­aid have long been pro­tected by Democ­rats in Congress.

Sig­nal­ing a poten­tial obsta­cle, House Demo­c­ra­tic leader Nancy Pelosi said she and fel­low Demo­c­ra­tic law­mak­ers will oppose includ­ing cuts in Social Secu­rity or Medicare ben­e­fits in any pack­age aimed at reduc­ing huge fed­eral deficits.

“We are not going to bal­ance the bud­get on the backs of America’s seniors,” Pelosi said.

Pelosi said she did not raise her con­cerns at Thursday’s meet­ing but will have a chance to bring them on Fri­day when she is to meet on her own with Obama at the White House. A Demo­c­ra­tic offi­cial said the meet­ing had been sched­uled ahead of time and was not designed to be a fol­low– up to Thursday’s session.

The White House has pro­posed reduc­tions in Social Secu­rity, Medicare and Med­ic­aid spend­ing. One pro­posal under dis­cus­sion would find sav­ings by chang­ing the for­mula for deter­min­ing annual cost-of-living increases for Social Secu­rity ben­e­fi­cia­ries. That would save about $100 bil­lion over 10 years. Offi­cials famil­iar with Thursday’s dis­cus­sions said that spe­cific pro­posal did not come up in the meet­ing with con­gres­sional leaders.

Nev­er­the­less, the White House was forced to down­play it after news orga­ni­za­tions reported that the gov­ern­ment retire­ment pro­gram was part of the talks.

“There is no news here — the pres­i­dent has always said that while Social Secu­rity is not a major dri­ver of the deficit, we do need to strengthen the pro­gram,” White House spokesman Jay Car­ney said. Any change, he said, would have to ensure that it “doesn’t slash benefits.”

Under­scor­ing the polit­i­cal stakes, Pew Research Cen­ter reported Thurs­day that in a recent poll it found that six of 10 of those sur­veyed believe it is more impor­tant to main­tain Social Secu­rity and Medicare ben­e­fits than to reduce the bud­get deficit.

On health care, nego­tia­tors have been clos­ing in on cuts of about $200 bil­lion over 10 years, about equally divided between Medicare and Med­ic­aid. In per­cent terms, that’s equiv­a­lent to a single-digit reduc­tion in what the gov­ern­ment will spend dur­ing that period on the two giant health care pro­grams serv­ing some 100 mil­lion Amer­i­cans. But for indi­vid­ual indus­tries such as hos­pi­tals, drug man­u­fac­tur­ers and nurs­ing homes, it could mean major hits.

Repub­li­cans have showed some new flex­i­bil­ity on the clos­ing of tax loop­holes and end­ing of cor­po­rate tax breaks that Obama has demanded. But they say any rev­enue gen­er­ated by those steps would have to be used to lower tax rates and sim­plify the tax sys­tem. Such a step would require a major over­haul of the tax code and could not be accom­plished in the few weeks left before the Aug. 2 debt ceil­ing deadline.

One Repub­li­can offi­cial said that under one option Repub­li­cans would include spe­cific lan­guage in leg­is­la­tion that would set a spe­cific time to under­take a tax over­haul. That offi­cial and oth­ers spoke only on con­di­tion of anonymity to dis­cuss the pri­vate negotiations.

Forty-one sen­a­tors and 235 House mem­bers have signed an Amer­i­cans for Tax Reform pledge to oppose rais­ing taxes that are not off­set by spend­ing cuts. Grover N. Norquist, pres­i­dent of the group, said Thurs­day in a tele­phone inter­view that House Repub­li­can lead­ers have assured him that what­ever revenue-increases are being dis­cussed would be off­set “dol­lar for dollar.”

Posted by AP News on Jul 7 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.