Debt-ceiling talks hit brick wall as President Obama, GOP trade jabs

President Obama and GOP leaders traded accusations Monday over who was to blame as talks to raise the nation’s $14.3 trillion debt ceiling stalled over the size and scope of the package.

Both sides pointed to the other as inflexible as the odds increased that Congress will not raise the nation’s borrowing limit by an Aug. 2 deadline. 

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Obama said Republicans were refusing to allow any tax hikes in the deal, including provisions aimed at the wealthiest taxpayers, while Republicans said the White House’s insistence on tax increases and resistance to meaningful Social Security and Medicare reforms was the problem.

Obama said during a late morning press conference that he had “bent over backwards” to meet the GOP halfway. “I do not see a path to a deal if they do not budge. Period,” Obama said. 

Less than two hours later, Speaker John Boehner (R-Ohio) retorted: “It takes two to tango.

“I understand that this is going to take sacrifice, and is going to take political capital on both sides,” Boehner said. “I’m certainly willing to take my fair share of it, but if we’re going to take political capital, then let’s stand up and do the big thing, the right thing for the country.”

Obama reiterated that he will not sign a short-term deal into law, citing election-year politics: “It’s not going to get easier. It’s going to get harder. So we might as well do it now — pull off the Band-Aid; eat our peas.” 

Leaks after a Monday afternoon meeting at the White House between Obama and congressional leaders underscored the tensions. Weeks ago, details barely emerged from closed-door talks, while on Monday all sides were frantically working to get their message out.

Republicans said their meeting focused on the medium-sized deal based on the Biden talks, despite Obama’s public push for a larger deficit-reduction package.

Democratic officials, for their part, said Obama echoed the call he made during a morning news conference, telling Republicans they should shoot for the biggest deal possible and lay out why a “cut-only” plan would not add up to the savings sought by Boehner.

Obama said the savings identified by the Biden group would yield about $1.5 trillion, not enough to raise the debt ceiling beyond the 2012 elections and meet Boehner’s requirement that deficits be cut by a higher amount than the borrowing limit is raised.

What’s more, Obama said no Democrat would be willing to sign on to a plan that cuts $1.5 trillion but doesn’t require any concessions from Republicans.

The two sides plan to meet again on Tuesday afternoon.

After the dueling press conferences, talks resumed at the White House between Obama and the top two congressional leaders from each party and chamber, but there appeared to be little if any progress. 

Talks broke down over the weekend over the issue of taxes after some signs that Obama and Boehner were both interested in pursuing a grand $4 trillion deficit-reduction package that would tackle entitlements, domestic and defense spending and the tax code. 

Sources familiar with the talks said Obama offered a proposal to eliminate breaks in the tax code while lowering rates, though not the Bush-era tax rates for families with income over $250,000. 

Some of the $1.7 trillion in new revenue in the $4 trillion deal would have been found by counting the expiration of the Bush tax rates for the wealthy, these sources said. Obama had suggested this would not be a tax increase if it were offset by a future promise of tax reform that ultimately lowered all rates, including the rate paid by the wealthiest taxpayers. 

In rejecting the $4 trillion deficit-reduction package on Saturday night, Boehner rejected this suggestion.

Obama on Monday said he and other, wealthier taxpayers should be asked to contribute to a package reducing the deficit to ensure pain does not fall only on the middle class and poor.

“I do not want, and I will not accept, a deal in which I am asked to do nothing — in fact, I’m able to keep hundreds of thousands of dollars in additional income that I don’t need — while a parent out there who’s struggling to figure out how to send their kid to college suddenly finds that they’ve got a couple thousand dollars less in grants or student loans,” Obama said.



The president also disputed Republicans who have suggested he is looking to immediately raise taxes, saying that what he is proposing would not take effect until 2013.


“Nobody’s looking to raise taxes right now,” Obama said. “What we have talked about is that starting in 2013, that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they’re making billions of dollars of profits.

“So I have bent over backwards to work with the Republicans to try to come up with a formulation that doesn’t require them to vote sometime in the next month to increase taxes. What I’ve said is, let’s identify a revenue package that makes sense, that is commensurate with the sacrifices we’re asking other people to make, and then I’m happy to work with you to figure out how else we might do it.”

House Majority Leader Eric Cantor (R-Va.) told reporters no taxes should be raised, given the sour economy. 

“We don’t believe that we ought to be raising taxes right now on people in this recession and in this economy, and they do,” Cantor said. “That is just an irreconcilable difference, and if the president wants the debt ceiling — we’re not going to go along with that if they want to raise taxes, and it just is what it is.”

The talks take place against the backdrop of a troubled economy. Friday’s jobs report for June showed the economy added a paltry 18,000 jobs for the month, and stocks on Monday fell as investors worried about the global economy.

Obama on Monday refused to give in on the idea of a grand bargain. 

The president said he is willing to “take on significant heat” from Democrats who are furious that Obama has put entitlement programs on the negotiating table, and he challenged Republicans to join him in pushing for the $4 trillion package.