By Erik Wasson and Russell Berman - 07/10/11 03:09 PM EDT
Treasury Secretary Timothy Geithner said that Obama will use Sunday night's dramatic deficit confrontation at the White House to “try to get the biggest deal possible” on the deficit.
“His view is we are going to keep at it,” Geithner said.
“They should not walk away now,” he said. Geithner said he understands that Republicans do not want to raise revenue, even from the wealthiest Americans, but said the deal on the table can assure them the revenue will go to deficit reduction and not to new spending.
On Saturday night House Speaker John Boehner (R-Ohio) backed off of a $4 trillion deficit cut compromise over tax increases. He wants talks to focus on a smaller package of cuts tied to the raising of the debt limit by Aug. 2.
Geithner said the deal “is going to require both leaders to compromise” and said President Obama is willing to cut Medicare and Medicaid spending. Liberal Democrats have been blasting Obama for days for putting entitlements including Social Security on the table.
“Democrats and this president are willing to do very hard things politically but only as part of a deal that is balanced,” he said.
He cautioned that a smaller deal cutting some $2 trillion from the deficit may not be any easier for both sides to agree on, even while such a small deal will do less to restore U.S. fiscal health. “Small deals are very tough too,” he said.
House Majority Leader Eric Cantor (R-Va.) walked out of talks led by Vice President Joe Biden on a smaller deal over revenue increases.
Geithner painted a bleak picture of the economy and said that the recovery will take a long time.
He said many people will experience difficulties “harder than anything they have experienced in their lifetime for a long time to come.”
Geithner said that there is no way to extend the Aug. 2 deadline to avoid a U.S. default, but he said leaders of both parties understand that. He said the U.S. credit rating would be downgraded immediately if Aug. 2 passes without an increase.
On CBS’s “Face the Nation,” the Treasury secretary reiterated that Aug. 2 is “absolutely” the drop-dead date for lifting the debt limit and said the government would be left “running on fumes” if Congress didn’t act. “There is no feasible way to give Congress more time,” Geithner said.
He said leaders needed to have a framework for an agreement by the end of next week, citing the possibility that the U.S. credit outlook would be downgraded in July if no deal was at hand.
Appearing after Geithner on CBS, Sen. Jeff Sessions (R-Ala.), the top Republican on the Budget Committee, said he doubted a large deal could get done, backing an effort for a more modest package of cuts. He warned, however, that lawmakers would need time to examine any deal. “We’re not just going to ratify some secret deal even if our good leaders just plop it down on the floor of the Senate,” Sessions said.
On NBC, Geithner acknowledged that he is contemplating leaving his position before the end of Obama's first term. He said he will be in office for the “foreseeable future”, but would not say he will stay for the first term.