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Obama Briefly Cheers Investors, but Not House Dems, With Deficit Talks

Obama Briefly Cheers Investors, but Not House Dems, With Deficit Talks

By Alexis Simendinger - July 8, 2011

The deficit talks at the White House Thursday with members of Congress put a familiar Barack Obama on display: the president who speaks long, thinks long-term, and is convinced he can sell more sacrifice to American voters if it's for their own good.

At the briefing room podium after lawmakers had exited was the Obama America came to know during health care debates, financial interventions, and auto bailouts -- a leader who practically revels in the grim.

"Everybody acknowledged that there's going to be pain involved politically on all sides," Obama told reporters after a 90-minute Cabinet Room session with House and Senate leaders. "But our biggest obligation is to make sure that we're doing the right thing by the American people, creating an environment in which we can grow the economy and make sure that more and more people are being put back to work."

Recent polls suggest that the president's efforts to stake out higher ground might be smart, at least for now. More Americans said they would hold congressional Republicans, and not Obama responsible (42 percent to 33 percent), if the debt ceiling is not lifted and the government fails to pay its debts, according to a Pew Research Center/Washington Post survey conducted in mid-June. Thirteen percent of Americans said they would blame both Republicans and the president.

While most Americans might blame Republican lawmakers if the country defaults, that is not the case among conservatives, who feel strongly that a deal to cut spending must be achieved before Washington greenlights more federal borrowing. As the New York Times' Nate Silver described in his data analysis Thursday, "As long as conservative Republicans are much more likely to vote than anyone else, the party can fare well despite that unpopularity, as it obviously did in 2010. But it means that Republican members of Congress have a mandate to remain steadfast to the conservatives who are responsible for electing them."

Obama's measured pronouncement Thursday that deficit talks had been "very constructive" briefly encouraged at least one important constituency -- investors, who were also cheered by early and encouraging tea leaves from payroll and jobless claim data released in advance of today's unemployment report from the Labor Department. But news that the national unemployment had crept up to 9.2 percent dimmed any enthusiam. Still, evidence of a pending budget deal to lift the $14.3 trillion ceiling on federal borrowing would silence any worries in global markets that the United States might default.

The caveat in Obama's summary of his Thursday session did not erase all anxiety, however. "The parties are still far apart on a wide range of issues," the president conceded.

The next step in the high-level negotiations will occur Sunday at the White House. The president said he and congressional leaders and staff members will "start engaging in the hard bargaining that's necessary to get a deal done." They agreed, he added, that they should find a compromise by the "hard deadline" of Aug. 2, when the Treasury Department says it will run out of funds to pay U.S. obligations.

The White House continued to believe on Thursday that negotiators on both sides of the aisle are not keen to take up a rolling series of debt-ceiling emergencies as alternatives to hammering out a bold budget deal that gets everyone beyond 2012, perhaps into the next decade. Some observers have suggested that Republicans, eager to tout their fiscal conservatism before voters in next year's elections, might try to negotiate concessions in exchange for short-term borrowing hikes, but decline to forge a long-term agreement with the president and congressional Democrats.

With the clock ticking toward Aug. 2, however, even arriving at a handshake deal later this month for a deficit-cutting package that achieves between $2 trillion and $4 trillion in deficit reduction from discretionary spending, revenues, and mandatory entitlements may yet require a short-term debt ceiling intervention.

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Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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