July 11, 2011
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.”