Obama, GOP try to figure out way forward on debt

 
A day after budget talks collapsed amid acrimony and finger-pointing, President Obama and congressional leaders meet this morning in search of a way to raise the $14.3 trillion debt ceiling while staving off a government default.
An angry Obama summoned the leaders Friday night, shortly after House Speaker John Boehner pulled out of month-long budget negotiations with the White House; the president said the Republicans walked away from a deal that would have cut the budget roughly $3 for every $1 in new tax revenue.
"We have run out of time," Obama said. "And they are going to have to explain to me how it is that we are going to avoid default."
Boehner said he broke off the White House talks because Obama insisted on raising taxes as part of a debt ceiling debt, including a last-minute request for $400 billion in new revenues. The speaker said he will now work with Senate leaders on a fallback agreement to raise the debt ceiling and avoid default.
"It's not in the best interests of our country to raise taxes during this difficult economy," Boehner said. "I'm confident that the bipartisan leaders here in the Congress can act. If the White House won't get serious, we will."
The White House meeting is at 11 a.m.
Leaders from both parties said they need to raise the $14.3 trillion by Aug. 2, a week from Tuesday. That's the day the Treasury Department says it loses borrowing authority needed to pay the nation's bills, risking default.
The potential effects of a default include higher interest rates on all loans, and a downgrade in the country's credit ratings, government officials have said. There is also the prospect of unamailed government checks ranging from Social Security payments to veterans benefits.
As Boehner works with the Senate on a new debt deal, they may well run into the same problem as the Boehner-Obama negotiations: Finding a deal that can pass both the Republican-run House and the Democratic-run Senate.
Boehner and other House Republicans say they will only raise the debt ceiling if Democrats agree to debt reduction of the same amount or more, at least some $2.5 trillion over ten years -- without raising taxes.
Obama and Democrats said reducing the $14 trillion-plus debt requires new tax revenues, and proposed eliminating tax breaks and loopholes for wealthy Americans such as oil company operators and private plane owners.
Democrats also said that proposed Republican budget cuts threaten such programs as Social Security and Medicare.
In blasting Boehner and the Republicans, Obama said Democrats were willing to cut $650 billion from Medicare, Medicaid, and Social Security, as well as other reductions that many Democrats had objected to. Overall, the agreement would have budget cuts of up to $3 trillion over ten years, with new tax revenues of up to $1.2 trillion.
"I was willing to take a lot of heat from my party," Obama said. "It is hard to understand why Speaker Boehner would walk away from this kind of deal."
Boehner said he had an agreement with the White House for $800 billion in revenue, but Obama added $400 billion at the last week."I'm confident that the bipartisan leaders here in the Congress can act," Boehner said. "If the White House won't get serious, we will."
Over the Senate, Republican leader Mitch McConnell and Democratic leader Harry Reid -- who will also be at today's White House meeting -- have been working on a complicated legislative deal that would basically allow Obama to raise the debt ceiling on his own, in exchange for about $1.5 trillion in budget cuts.
But there's some question as to whether a Reid-McConnell plan could pass the Republican House. They've been talking about budget cuts of some $1.5 trillion, less than the GOP has been seeking.

Obama, Lawmakers Hold Round Four of Debt Talks

President Barack Obama along with several Republican and Democratic congressional leaders held a fourth round of negotiations in as many days Wednesday at the White House aimed at achieving a deficit reduction and debt compromise.

With media reports filled with various versions of what has been said behind closed doors, based on anonymous White House and congressional sources, reporters pressed White House briefing spokesman Jay Carney for specifics.

They got none, but Carney did address a proposal by Senate Minority Leader Mitch McConnell for a procedurally-complex legislative tactic that would have essentially transferred authority, and political responsibility, for raising the debt ceiling from Congress to the president.

McConnell proposed passing legislation to allow Mr. Obama to raise the debt limit in three stages by $2.5 trillion, through the 2012 presidential election year, but requiring the president to list spending cuts at least as high as increases in the debt ceiling.

The senator described this as a way for Republicans to avoid being politically damaged by a worsening economy, because under the plan lawmakers could avoid voting against a debt ceiling increase.

Carney called the proposal an acknowledgment by Republicans that there is no alternative to raising the debt limit.  He did not reject it outright but said Mr. Obama remains focused on achieving the largest possible deficit reduction deal. "The linkage that was created that tied significant deficit reduction to this deadline, was so that we could work together, roll up our sleeves and do this.  Well the president is ready and willing to do that, he is willing to make compromises, he is willing to go big here," he said.

McConnell spoke on the Senate floor before he and other lawmakers went to the White House for their fourth round of talks with Mr. Obama. "Americans don't want tax hikes, they don't want phony spending cuts, they don't want a debt disapproval plan, and they don't want us to default on our debts.  They want real cuts, and real reform, now," he said.

In a CBS News television interview on Tuesday,  President Obama had this response to McConnell's statement the day before that a solution to the nation's fiscal mess was unobtainable with Mr. Obama in the White House. "You know, Mr. McConnell said, I think the day I was elected, that his job was to try to see me beat.  I think what the American people are looking for is not that kind of partisan politics," he said.

In addition to the president, his advisers, and lawmakers the White House negotiations have included Treasury Secretary Timothy Geithner, who warned of the dire consequences of a debt default on August 2.

In testimony to a congressional committee on Capitol Hill on Wednesday, Federal Reserve Chairman Ben Bernanke said a default would have wide-ranging impacts. "Clearly if we went so far as to default on the debt it would be a major crisis," he said.

White House spokesman Carney said Wednesday's talks would look at areas where there is agreement, or where agreement is near, as well as issues on which significant negotiations remain.

Asked if Mr. Obama would rule out a very short stop gap measure, if negotiators were on the edge of a larger compromise, Carney said "there is enough time to get this done" adding the president believes there is momentum toward achieving a significant balanced deficit reduction package.