By Erik Wasson and Russell Berman - 06/10/11 12:23 AM EDT
The debt negotiations led by Vice President Biden are picking up the pace amid fears that a prolonged fight to raise the debt ceiling could be poisonous for the economy.
Biden’s group made its first extended attempt to navigate the thorny issue of taxes Thursday as the vice president and Democratic lawmakers made the case for raising revenues through the elimination of tax breaks for the oil-and-gas industry.
House Republicans have been resolutely opposed to increasing taxes as part of a broad agreement to raise the $14.3 trillion debt ceiling and reduce long-term deficits. As a result, participants reported little progress during Thursday’s meeting.
“No ground lost, no ground gained,” Van Hollen said.
“We discussed different revenue options, and it was simply an exchange of views,” he said.
With less than two months before a Treasury-set deadline for raising the debt limit, lawmakers acknowledged feeling a new sense of urgency.
The group will meet three times next week after having met only sporadically since early May. The debt negotiators met Thursday for the first time in two weeks.
“We recognize it’s important to pick up the pace,” Van Hollen said. Still, he acknowledged negotiators have not set “a hard deadline” for reaching an agreement that could be pitched to their respective caucuses.
House Majority Leader Eric Cantor (R-Va.) said the talks have taken on increased importance in the wake of last week’s jobs report, which showed the unemployment rate increased to 9.1 percent in May.
“The news economically on the jobs front in the last several days underscored the importance of this meeting that we just came out of. There’s a commitment for next week that we will be engaging, once again, in a robust series of meetings to see if we can achieve a result,” Cantor said.
Lawmakers are running out of time to find a package of deficit cuts that will convince congressional Republicans to raise the debt ceiling. Speaker John Boehner (R-Ohio) has said that any debt increase must be paired with a bigger reduction in spending.
“We believe that many of the problems surrounding the lack of job creation and growth in this country have to do with the fact that there isn’t a credible plan to manage down the debt and deficit in this country,” Cantor said. “That’s what we’re trying to produce here, and we had much substantive discussion today and look forward to more next week.”
Cantor had raised expectations ahead of Thursday’s meeting by telling his GOP colleagues that the talks were moving on to healthcare entitlements such as Medicare and Medicaid. Sen. Jon Kyl (R-Ariz.), the other Republican negotiator in the talks, had said the discussion was going to focus on tax increases and spending caps.
Biden left without speaking to reporters, but the rest of the group continued meeting for nearly another hour. Van Hollen said the vice president had to chair a National Security Council meeting with President Obama.
Democrats’ demands center on raising taxes on the wealthy by allowing Bush-era tax cuts on wealthier taxpayers to expire. Broader tax reform as part of a deal on the debt has been ruled out as too complex by both the administration and Republicans.
The Treasury Department has set an Aug. 2 deadline for raising the debt ceiling, and says the nation will suffer a “catastrophic” default if action is not taken by that date.
The GOP’s focus has been on pressing for a hard spending cap that could limit future spending to 20 percent of the nation’s gross domestic product.
Biden wants the group to agree on a looser debt trigger that would mandate the debt decline as a percentage of the economy. Under the administration’s approach, the trigger could cause automatic tax increases.
Cantor has repeatedly rejected tax hikes as part of the plan, making Thursday’s discussion of revenues a crucial test for the Biden group.
“As the vice president said, whether you agree with everything we’re discussing or not, we’re going to discuss these things just so people have an understanding of what each side’s position is,” Van Hollen said.
“Nobody walked out,” he added with a laugh.
Both sides are wary of the economy, which has shown signs of slowing down since the talks began. That has led to a new round of discussion in Washington about the need to stimulate the economy, including from Obama.
“Some of the steps that we took during the lame-duck session — the payroll tax, the extension of unemployment insurance, the investment in — or the tax breaks for business investment and plants and equipment — all those things have helped,” Obama said Tuesday during a press conference with German Chancellor Angela Merkel.
“And one of the things that I’m going to be interested in exploring with the members of both parties in Congress is, ‘How do we continue some of these policies to make sure that we get this recovery up and running in a robust way?’ ”
Obama was referring to the December deal that extended all of the Bush tax rates. That deal also included an extension of federal unemployment benefits and a one-year reduction in the payroll tax.
In addition to Cantor, Kyl, Van Hollen and Biden, Sens. Max Baucus (D-Mont.) and Daniel Inouye (D-Hawaii) are participating, as are Rep. James Clyburn (D-S.C.), Treasury Secretary Timothy Geithner and White House Budget Director Jack Lew.
This story was originally posted at 6:43 p.m. and updated at 8:23 p.m.