By Bob Cusack and Sam Youngman - 07/23/11 01:10 AM EDT
White House officials said Friday evening that they were very close to getting a deal to raise the nation's debt ceiling before Speaker John Boehner (R-Ohio) backed away.
“We were this close to settling” on an agreement, a White House aide said, holding his finger and thumb an inch apart.
Following Boehner’s move, President Obama and White House officials expressed exasperation about what they described as a puzzling turn of events.
During a press conference on Friday, Obama said Boehner wasn't returning his phone calls, a point emphasized by White House officials during an impromptu background briefing.
Boehner and his aides presented a very different story on Friday. The Speaker told House Republicans in a letter that President Obama is “adamant” about raising taxes and would not agree to “fundamental changes” to entitlement programs.
White House officials said there were three major issues that separated Republicans and the White House, but little else. They claimed Republicans agreed to raise the debt ceiling with spending caps, as well as triggers that would kick in later in the Congress if a comprehensive bill dealing with tax reform and entitlement spending were not passed. That measure, according to administration officials, would have been considered under rules that would shield it from a filibuster.
If the tax reform bill faltered, a series of triggers would kick in that both Republicans and Democrats would want to avoid, thus creating incentives to pass it. They included $800 billion in revenues generated from the Bush tax rates set to expire at the end of 2012, though White House officials did not specify details. The sources added that Boehner agreed to that figure, acknowledging the president was pushing for an additional $400 billion in revenues.
“I can promise you we were very flexible on [the additional $400 billion],” a senior administration official said.
Boehner balked at that request, the White House officials stated, adding they were open to negotiating on it. The other two issues of disagreement, the White House aides said, were: 1. whether the repeal of the individual mandate in healthcare reform should be included in the trigger provisions and 2. how deep the Medicaid cuts should be.
On Medicaid, the differences were minuscule, an administration source said. And the two sides were not apart at all on Medicare, the other health entitlement that has been a part of the discussions.
“On Medicare, we were identical,” the official claimed, saying the president had agreed with Republicans on eligibility, cost-sharing, premiums and other facets of the program.
Republicans also raised the possibility of getting rid of the controversial Independent Payment Advisory Board, which was included in the healthcare reform law, a White House official said.
Administration officials indicated strong opposition to including the individual mandate in a deficit reduction bill. They claimed that was a new ask from the GOP that was not tackled during the talks led by Vice President Biden earlier this summer.
Every other major issue was basically agreed to, including raising the eligibility age of Medicare from 65 to 67 years old “over a long period of time,” the administration official added.
Other general areas of agreement included extending the payroll tax, extending unemployment benefits and altering the Consumer Price Index on Social Security.
Some of the figures being discussed would cut $150 billion in healthcare provider payments, raise $150 billion in premiums and $125 billion in Medicaid reductions.
Friday's news developments shed some light on friction between Senate Majority Leader Harry Reid (D-Nev.) and the White House on Thursday.
The Hill reported that Reid confronted Lew on Thursday as media reports indicated a deal was close at hand.
“I’m the Senate majority leader — why don’t I know about this deal?” Reid demanded as soon as the budget director walked into the historic Mansfield Room for a meeting with Senate Democrats, according to a lawmaker who witnessed the exchange.
Lew shot back: “If there’s a deal, then the president doesn’t know about it, the vice president doesn’t know about it and I don’t know about it.”
An administration official Friday evening said there was no final deal Thursday afternoon following a meeting with Boehner's chief of staff, Majority Leader Eric Cantor's (R-Va.) chief of staff and other White House and GOP aides.
However, the official admitted they were close to an agreement.
On Thursday, both the White House and GOP leadership aides publicly said a deal was not close, attempting to shoot down articles that suggested major progress had been made.
The White House on Friday clearly tried to change the narrative, indicating much progress had been made Wednesday and Thursday.
It’s unclear how the sides will now proceed to meet the Aug. 2 deadline for raising the debt ceiling.
Administration officials on Friday discounted the possibility of using the 14th Amendment, saying it should be done legislatively.