No Progress in Debt Ceiling Talks; Obama to Meet Press Monday

No Progress in Debt Ceiling Talks; Obama to Meet Press Monday

By Alexis Simendinger - July 11, 2011

On Monday, President Obama and House and Senate leaders will head back to square one as they try to pare the deficit enough to avert an economic meltdown in August. But before they begin, the president will try to frame the high-stakes challenge on his terms during a morning news conference, his second in two weeks.

Returning to the terrain lawmakers plowed during budget talks held weeks ago with Vice President Joe Biden, the negotiators agreed during a brief meeting Sunday to see if they can salvage a mix of spending cuts and possible revenue changes that could add up to $2.4 trillion over a decade -- the largest package they can possibly muster -- according to a congressional aide. It is significant that the negotiators did not set a precise dollar-level goal Sunday, but left somewhat open-ended the amount of deficit reduction they may yet be able to agree on.

After Obama and House Speaker John Boehner briefly aimed higher last week -- for a sweeping and comprehensive deal touching every important category of the federal budget for a total goal of $4 trillion in deficit reduction -- the "grand bargain" fell apart. House members refused to raise taxes. Democrats said they would not tolerate benefit cuts in Medicare or changes to Social Security, and they insisted on new revenues through tax increases as part of any deal. Pulling the plug after failing to agree with the White House, Boehner issued a statement Saturday announcing that the negotiators would aim for a less ambitious deal.

On those terms, Obama and congressional leaders met at the White House Sunday for 1 hour 16 minutes -- just enough time to look pained as reporters observed them at the outset in the evening, and too brief a time to plow much new ground together. With no set progress in hand -- except an agreement to keep talking and to aim for a deal sizeable enough to avert catastrophe in 23 days -- the negotiators began issuing statements clinging to the same ground they have claimed for months.

An aide to Boehner said "the speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward. The speaker restated the fundamental principles that must be met for any increase in the debt limit: spending cuts and reforms that are greater than the amount of the increase, restraints on future spending, and no tax hikes. The president agreed with the speaker that their previous talks did not produce any agreement. The group agreed to continue talks in the coming week."

Don Stewart, deputy chief of staff for communications to Senate Minority Leader Mitch McConnell, took aim at Obama. "[I]t's disappointing that the president is unable to bring his own party around to the entitlement reform that he put on the table. And it's baffling that the president and his party continue to insist on massive tax hikes in the middle of a jobs crisis while refusing to take significant action on spending reductions at a time of record deficits," he said.

McConnell, he continued, "believes we need to reduce Washington spending, reform and strengthen entitlement programs, and prevent the more than a trillion dollars in tax hikes that Democrats want to add at a time of rising unemployment."

House Minority Leader Nancy Pelosi repeated the message she has been delivering since last week when Democrats learned that the White House was willing to entertain savings from Medicare, Medicaid and Social Security as part of the possible $4 trillion deal with Republicans.

"This package must do no harm to the middle class or to economic growth," Pelosi said in a statement issued by her office. "It must also protect Medicare and Social Security beneficiaries, and we continue to have serious concerns about shifting billions in Medicaid costs to the states. . . . We are still hopeful for a large bipartisan agreement, which means more stability for our economy, more growth and jobs, and more deficit reduction over a longer period of time," she said.

If negotiators can eventually agree on $2.4 trillion in deficit reduction, that amount would satisfy Republican demands that new borrowing after Aug. 2, the deadline Treasury says it faces for default on U.S. obligations, would be offset through the end of 2012. The president is seeking that accomplishment as a minimum achievement, and most of the leaders do not want to face a rolling series of legislative bargaining sessions to get short-term debt ceiling increases into next year's election.

A $2.4 trillion showdown -- now considered a mid-range option -- appeared too contentious and too ambitious for negotiators just a few weeks ago. The Biden talks, which included possible compromise on at least $1 trillion in spending reductions, stalled when House Majority Leader Eric Cantor objected that Democrats sought to raise taxes. The president and congressional Democrats had identified some $400 billion in possible new revenue over 10 years, including the elimination of some tax loopholes and special tax treatments for ethanol and corporate jets, for instance. Democrats, particularly in the House, argued that any deficit pact crafted just from spending cuts would prove too draconian for families and the middle class, and could not pass the House.


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

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