Debt showdown set for Sunday

The White House and congressional leaders lurched closer to a climactic showdown over the debt limit Thursday, as President Obama scheduled a Sunday meeting that could determine whether a broad deficit-reduction deal can be reached before time runs out.

Obama on Thursday convened a bipartisan summit of eight top lawmakers from the House and Senate. Officials in both parties acknowledged the mounting urgency of forging an agreement in time to avoid a federal default after Aug. 2. 

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The president described the meeting as “frank” and “very constructive,” but said the leaders remain “far apart on a wide range of issues.”

The goal, officials said, is a once-in-a-decade pact that achieves around $4 trillion in budget savings over 10 to 12 years in exchange for a corresponding increase in the $14.3 trillion federal borrowing authority. 

Obama instructed congressional and administration officials to work through the weekend on a deal, and called the Capitol Hill leaders back to the White House for a crucial meeting on Sunday.

He said he expected that “at that point, the parties will at least know where each other’s bottom lines are, and will hopefully be in a position to then start engaging in the hard bargaining that’s necessary to get a deal done.”

The final sticking points are familiar to each side. House and Senate Democrats fretted about a renewed willingness by the president to make changes to Medicare and Social Security, while Republican leaders reiterated their opposition to overall tax increases that Democrats have said are essential to any balanced deal.

In a briefing for Republican senators, House Speaker John Boehner (R-Ohio) and Senate GOP leader Mitch McConnell (Ky.) told lawmakers they would know by Sunday whether they can reach a comprehensive accord with the president.

“What they said is they expect to have an agreement or no agreement by Sunday,” said a GOP senator, summarizing the meeting with Boehner and McConnell. “If there’s going to be an agreement, we’ll have it by Sunday. We almost have to have it by Sunday in order to get it written, debated, voted on and enacted by the end of July.”

A second GOP senator said there’s “no deal or framework of a deal” but “serious consideration about everything.”

The lawmaker said Boehner and McConnell noted that Obama had expressed a willingness to put Medicare and Social Security reform on the table. But GOP leaders are not certain what exactly Obama will accept in return as part of an agreement. 

The senator also said that it was clear from the meeting that if a comprehensive deal were not reached by the start of next week, there was very little chance of reaching a broad deficit-reduction deal by the Treasury-identified deadline of Aug. 2. 

“If we’re going to have a deal, it’s going to have to be at the start of next week,” the senator said. 

Before the White House meeting, Boehner told House Republicans that he would not divulge details of his negotiations with Obama, but he sought to reassure his conference that he would not accept net tax increases as part of any deal.

“Everything is on the table except raising taxes on the American people,” Boehner told reporters after that briefing.

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Amid reports that Boehner had signaled a new openness to include a tax overhaul in a broad debt deal, he said comprehensive tax reform was “under discussion,” but again repeated his denunciation of higher taxes.

Rep. Peter King (R-N.Y.) described Boehner as “upbeat” about the negotiations, and said the Speaker told lawmakers the probability of a deal in the coming days “could be 50-50.”

Boehner also assured lawmakers that legislation to implement an agreement would go through committees, unlike the spending deal struck in April to avert a government shutdown, Rep. James Lankford (R-Okla.) told The Hill.

“This is not like the [spending deal] where it’s a finished package — ‘Here it is, take it or leave it,’ ” Lankford said, describing Boehner’s comments. “We still have an opportunity for members to have input into it. That’s good.”

The committee process underscores the urgency of finishing a deal soon to provide officials enough time to draft legislation and vet it with rank-and-file members in the three weeks before the deadline.

Lankford said Boehner reminded GOP lawmakers that “there’s a difference between revenue and tax increases” — a reference to the party’s willingness to consider ending tax breaks for corporate jet owners and the oil-and-gas industry as part of a deal.

GOP lawmakers were told the House would likely cancel a planned recess for the week of July 18, one member said.

Congressional Democrats, meanwhile, spent a busy day at the Capitol responding to reports that Obama had offered to make significant changes to Medicare and Social Security as part of a “grand bargain” that would include tax reform in the debt-reduction deal.

A source briefed regularly on the talks said several tradeoffs on taxes and Social Security are on the table. 

Large Social Security reforms would be contingent on Republicans accepting large revenue increases. The source said up to $1 trillion in revenue is possible with the inclusion of a long-term patch to the Alternative Minimum Tax, increased pension contributions and changes to how inflation in the consumer price index is calculated, that would affect income tax bills and the benefit levels for federal employees and entitlement programs like Social Security and Medicare.

One option that has been floated in staff talks, the source said, is to tie future spending cuts to the completion of tax reform after the initial debt deal, a recognition that it would be difficult — if not impossible — to accomplish major tax reform in the next few weeks.

The White House sought to push back on a Washington Post report that major changes to Social Security were under consideration. Press secretary Jay Carney said the president’s position remained unchanged that Social Security is not a major driver of the deficit and should be strengthened separately from the debt talks, although he did not rule out changes to the program in a broad deal.

After the White House meeting, House Minority Leader Nancy Pelosi (D-Calif.) sought to draw a line in the sand on entitlements. 

“We do not support cuts in benefits for Social Security and Medicare,” she told reporters.

Pelosi and other Democratic leaders said that, in particular, Social Security should be on a separate track from the debt discussions. She said changes to those programs could compromise support from House Democrats.

“What I’ve said is, if there is a table that Social Security is on, it’s on its own table, and any savings should be plowed back into making Social Security stronger,” Pelosi said. “And the same applies to Medicare as well.”

The White House summit featured the top two leaders in each congressional caucus, along with Obama and Vice President Biden: Boehner, House Majority Leader Eric Cantor (R-Va.), Pelosi, House Minority Whip Steny Hoyer (D-Md.), Senate Majority Leader Harry Reid (D-Nev.), Senate Majority Whip Dick Durbin (D-Ill.), McConnell and Senate Minority Whip Jon Kyl (R-Ariz.).

Pelosi will return to the White House on Friday for a one-on-one meeting with Obama.

The two House Democrats who participated in the group led by Biden, Reps. Chris Van Hollen (Md.) and James Clyburn (S.C.), appeared to wash their hands of the latest developments. Both expressed deep skepticism that comprehensive tax reform could be completed in the next three weeks.

“You can’t do comprehensive between now and Aug. 2,” Clyburn said. The meetings at the White House, he said, were “above my pay grade.”

Van Hollen warned that House Democratic support would be needed for a final deal: “Nobody should be taking the votes of House Democrats for granted.”

Alexander Bolton, Erik Wasson and Molly K. Hooper contributed.

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