Head of Dem Caucus warns: No revenues in deficit deal, no Dem votes

The leader of the House Democratic Caucus indicated this weekend that tax-revenue hikes must be included in a sweeping deficit-reduction plan to win the Democratic support it will need to pass.

Rep. John Larson (D-Conn.) suggested House Republicans would get no Democratic help if the final package includes only spending cuts and the promise of new revenues later.

"What the Democratic Caucus has been focused on … is balance," Larson said during an appearance on C-Span's "Newsmakers" program, which will air Sunday. "Obviously, balance would include cuts and revenues."

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Larson's remarks came hours before House Speaker John Boehner (R-Ohio) abruptly ended talks with President Obama on a package to raise the nation's $14.3 trillion debt ceiling and rein in deficit spending. Both sides said the proposal under discussion included some revenue increases, but Boehner walked away when the White House insisted on greater tax hikes, the Speaker said at a press conference Friday night.

"They insisted on raising taxes," Boehner said. "The White House moved the goal posts."

Obama called Boehner and other congressional leaders to the White House on Saturday morning in an effort to keep the talks over a grand bargain alive. But with the clock ticking down quickly toward the Aug. 2 default deadline, many observers – including some members of Congress – say the odds of finalizing a broad agreement before then are growing distant.

Some Democrats are pushing for a clean debt-ceiling vote to stave off default. Some Republicans have suggested a package that would solidify enormous spending cuts now, but would push tax reforms and revenue hikes to next year. It's the latter notion that Larson rejected on Friday.

"That may be something that Speaker Boehner feels that he can get 218 Republican votes on," Larson warned. "They can pretty much do whatever they want. The question is do they have the will?"

Boehner is expected to need scores of Democratic votes to pass the package, because a large number of House Republicans are opposed to raising the debt ceiling by even another $1.

On Friday, House Minority Leader Nancy Pelosi (D-Calif.) laid out the parameters of a cuts-only plan she said could slash deficit spending by up to $2.5 trillion. Pelosi also conceded Democrats might have to accept such a deal in order to secure a debt-ceiling hike before Aug. 2.

"We're willing to bite the bullet and make serious cuts in discretionary spending," Pelosi told reporters in the Capitol, according to Talking Points Memo. "[T]hat's a non-revenue path. I don't like it at all, but it doesn't go near our entitlements."

Such a plan, however, probably won't fly with GOP leaders who want significant entitlement cuts to be part of the package. Obama said Friday that he'd offered Republicans $650 billion in cuts to Social Security Medicare and Medicaid – cuts wildly unpopular with the Democrats, the president said – but Boehner said they didn't go far enough.

"They refused to get serious about cutting spending, and making the tough choices that are facing our country on entitlement reform," Boehner said.

Larson on Friday renewed the call from Democratic leaders that cuts in entitlement benefits have no place in the current debt-ceiling debate. He did leave the door open, however, for fundamental entitlement reforms – including a hike in the eligibility age for Medicare and Social Security – as part of a later discussion on deficit reduction. 

"People are living longer … and people are leading healthier lifestyles," he said. "This is something that's got to be certainly on the table in terms of discussion" in the future.

The Connecticut Democrat said he's pushing for a clean debt-ceiling bill – a non-starter for House Republicans – and hammered GOP leaders for holding the debt-ceiling hike "hostage" to accompanying spending cuts.

"How does cutting more … help put people back to work? I don't think it does," Larson said. "What we ought to do is pass a clean debt-ceiling [bill] and then have at it in a way that we can deal with both the debt and also the issue of growing jobs to enhance revenues."

With only the senior-most congressional leaders privy to the debt negotiations, Larson suggested that other members are growing frustrated with being left in the dark. 

"It's a package du jour," Larson said. "[It's] all confusing to the people on the outside, but I dare say, equally confusing to members here."

Larson added that it's "very hard to sell" the Democrats' warnings about the impact of spending cuts when lawmakers "don't know … what's in that package."

"There's not an awful lot of clarity that's coming forward in terms of what is really the flesh on the bones here," he said. "what are we really talking about?"

As part of the negotiations, Obama has been pushing to extend an existing payroll tax holiday an additional year – an idea opposed by roughly a third of House Democrats, who fear it could ultimately lead to an erosion of the Social Security benefits that rely on that revenue.

Larson on Friday declined to take a position on the proposal, saying he'd hinge his decision on the condition of the economy at the time.

"That is a stimulant, that is a help," Larson said of putting more money into workers' pockets. "From a policy standpoint, and for the preservation of Social Security, this raises concerns [about] whether or not the money's going to be there. 

"My inclination is to say no, but I wouldn't rule it out given the shape of the economy," he added.

"The caucus is, I would say, split in regards to that."

Larson also charged the Republicans with doing everything in their power to unseat Obama, even if it risks having the government default and the economy tank.

"One side," Larson charged, "wants to prevent the guy in the White House from succeeding at all costs."