Obama steps into high-stakes debt-limit talks

By Felicia Sonmez , Zachary A. Goldfarb and Lori Montgomery, The Washington Post
Posted June 24, 2011, at 7:59 p.m.

WASHINGTON — A day after debt-reduction talks led by Vice President Joe Biden appeared to have broken down, the White House announced that President Barack Obama would directly intervene in the negotiations, beginning one-on-one meetings with key lawmakers next week.

Obama will start by meeting with Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., on Monday.

Speaking Friday at Carnegie Mellon University before the announcement, Obama said that although the government must cut spending to reduce the deficit, it is also crucial to invest in new technologies that would create jobs and keep the United States economically competitive.

“I have a larger vision for America … where we work together, Democrats and Republicans, to live within our means, to cut our deficit and debt, but also to invest in what our economy needs to grow,” Obama told a crowd of professors, business people and local officials on the Pittsburgh campus.

The parties face an Aug. 2 deadline set by the Treasury Department to raise the debt limit before the country risks defaulting on its debt obligations.

But a quick compromise seemed unlikely on Friday as House Speaker John Boehner, R-Ohio, reiterated his pledge to oppose any comprehensive deficit-reduction deal that increases taxes. The issue of tax increases is one of the fundamental philosophical differences between both parties that the congressional negotiators this week tried to address in the Biden talks.

“The president and his party may want a debt limit increase that includes tax hikes, but such a proposal cannot pass the House,” Boehner said in a statement Friday morning.

Boehner said any deal to raise the country’s $14.3 trillion debt limit by the deadline must include spending cuts that exceed the amount of the debt limit hike and budget reforms that will restrict Washington’s ability to spend in the future — not tax increases.

“If the president wants this done, he must lead,” Boehner said.

On Thursday, congressional Republicans had abruptly pulled out of debt-reduction talks with the White House. Senior Republicans said negotiations led by Biden had ceased making headway as Democrats pressed for as much as $400 billion in new taxes on corporations and the nation’s wealthiest households.

The breakdown comes after seven weeks of negotiations that all sides say made real progress toward a plan to restrain the swollen national debt. Biden and six lawmakers from both parties had tentatively agreed to more than $1 trillion in savings and had begun to tackle the toughest issues: Democratic demands for higher taxes and spending cuts at the Pentagon, and Republican demands for sharp cuts to health and retirement programs.

The decision to pull the plug on the Biden talks was made by House Majority Leader Eric Cantor, R-Va., who announced the move in an early morning interview with the Wall Street Journal. Before the story hit the paper’s Web site, aides said Cantor called Boehner, Kyl and other GOP leaders — as well as Biden — to let them know he would not be attending the bargaining session set for Thursday afternoon.

McConnell on Friday called on Obama to take tax increases off the table at next week’s meeting so that the two could engage in “a serious discussion about our country’s economic future.”

“It is my hope that the president requested this meeting in order to finally explain what it is that he’s prepared to do to solve our nation’s fiscal crisis,” McConnell said in a statement. “He’s requested an increase in the debt ceiling, but hasn’t yet explained to the American people what, other than tax hikes, he’s prepared to do about the massive deficits we’ve seen during his administration.”

Speaking at an event in Richmond on Friday, Sen. Mark Warner, D-Va., accused the Republicans of “playing political games.”

Warner and Sen. Saxby Chambliss, R-Ga., have been leading a bipartisan band of senators dubbed the Gang of Six, to forge a comprehensive deficit-cutting plan — a mix of spending cuts and changes to the tax code and entitlement programs.

“The numbers don’t lie,” Warner said. “The idea that we can solve this on one side of the balance sheet is a fundamental lack of basic Econ 101.” He said he hopes to unveil the Gang of Six plan in a week or so.

Meanwhile, in a conference call Friday afternoon, Sen. Charles Schumer, D-N.Y., and Rep. Chris Van Hollen, D-Md., one of the leaders in the budget talks, charged that Republicans had abandoned the deficit-reduction talks over their insistence on preserving tax breaks for the wealthy and on overhauling Medicare.

“This was not about coming to an impasse,” Schumer said. “There was just a lack of political will by the Republicans to accept the kind of compromise that was taking shape. A deal was potentially forming and Leader Cantor didn’t want his fingerprints on it.”

And just as Republicans doubled down Friday on their opposition to higher taxes, the Democrats maintained that tax increases are a necessary part of any bipartisan deal.

“Until the Republicans are more worried about reducing the deficit than they are about Grover Norquist, we’ve got a problem because every serious approach to this issue requires a balance,” Van Hollen said, referring to the Americans for Tax Reform president who has spearheaded the no-taxes-pledge signed by the overwhelming number of Republicans. “Adult moments mean making tough decisions, not running away from tough decisions.”

Staff writer Anita Kumar contributed to this report.

http://bangordailynews.com/2011/06/24/politics/obama-steps-into-high-stakes-debt-limit-talks/ printed on December 26, 2014