Obama, lawmakers press ahead for elusive debt deal

WASHINGTON Sat Jul 16, 2011 5:55pm EDT

1 of 2. U.S. President Barack Obama holds a news conference in the Brady Press Briefing Room at the White House in Washington July 15, 2011.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - President Barack Obama and congressional leaders pressed ahead with private talks on deficit reduction on Saturday, seeking an as-yet-elusive way to lift the debt ceiling and avoid a U.S. default next month.

Congress must raise the $14.3 trillion limit on U.S. borrowing by August 2 or the government will run out of money to pay its bills, causing turmoil in global financial markets and potentially forcing the United States into another recession.

Republicans want a deficit-cutting deal in order to raise the debt limit, but they disagree with Democrats on how to do it. The White House wants some tax increases on wealthier Americans to be part of a package; Republicans reject that.

Prospects for a deal any time soon appear unlikely. The House and Senate were expected to spend much of next week debating budget-related measures that have little chance of becoming law.

On Thursday evening, Obama gave lawmakers a Saturday deadline to come up with a plan to go forward and suggested he could call for further talks over the weekend if needed.

No new talks were scheduled, however, according to Republican and Democratic aides.

A White House official said Obama, Vice President Joe Biden, and other administration officials were "in frequent communication" with congressional leaders and staff, discussing "various options."

The top two Republicans in the House of Representatives, John Boehner and Eric Cantor, met on Friday with Treasury Secretary Timothy Geithner and Bill Daley, the White House chief of staff.

"Meetings have been occurring, ideas have been exchanged, and scenarios are being discussed," said Boehner spokesman Michael Steel, who added that there was nothing to report in terms of progress.

Obama pressed his case with the American public in his weekly Saturday radio and Internet address. "The truth is, you can't solve our deficit without cutting spending," he said.

"But you also can't solve it without asking the wealthiest Americans to pay their fair share -- or without taking on loopholes that give special interests and big corporations tax breaks that middle-class Americans don't get."

Republicans say the tax hikes Obama is seeking would hurt the shaky economic recovery.

BALANCED BUDGET?

The House is expected next Tuesday to pass a bill that would raise the debt ceiling by the $2.4 trillion Obama has requested as long as Congress adopted a balanced budget amendment -- an unlikely prospect.

Republican Senator Orrin Hatch has lined up every Senate Republican behind a balanced-budget measure. It is expected to fail in the Democratic-controlled chamber next week.

"Only by restoring constitutional restraints on the ability of Congress to spend, can we constrain the growth of the federal government," he said in the weekly Republican address.

"The solution to a spending crisis is not tax increases. Yet, Washington has consistently demonstrated that it cannot control its urge to spend."

As the two sides bicker, the consequences of inaction are looming. Ratings agencies Moody's and Standard & Poor's have signaled they may cut the gold-plated U.S. credit rating if the borrowing limit is not raised and deficit-reduction measures are not laid out.

The White House and congressional leaders have tried to reassure markets the United States would not default.

A backup plan put forward by Senate Republican Leader Mitch McConnell may be the solution all sides embrace if a big deal cannot be reached. McConnell's office was not meeting with the White House this weekend, an aide said.

McConnell's plan would essentially allow Democrats to raise the debt ceiling without Republican help, and Senate Democratic Leader Harry Reid has cautiously embraced it. The plan could include about $1.5 trillion in spending cuts and set up a panel to find further savings. The Senate could vote on it late next week, but it remains unpopular with House Republicans.

"The idea itself is stupid," Republican Representative Jason Chaffetz told Fox News. "The so-called adults in the room have been there too long."

The president warned on Friday that inaction could lead to higher borrowing costs for ordinary Americans -- "effectively a tax increase on everybody," he said.

"Whether you're using your credit or you're trying to get a loan for a car or a student loan, businesses that are trying to make payroll, all of them could end up being impacted as a consequence of a default," Obama said.

(Additional reporting by Laura MacInnis and Mari Saito; Editing by Eric Beech and Todd Eastham)

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Comments (60)
AndyCutler wrote:
I understand your columnist is to the left of Lenin, but that is no excuse for omitting the direct statements by many of the House leadership that the proposed senate plan has no chance of being passed in the house no matter how it is dressed up. Thus it is dead on arrival. It isn’t even clear it would pass the Senate, with McConnell probably the only Republican vote for it and many Democrats questioning the wisdom of supporting it.

The issues are whether the house will exercise some leadership and pass a plan, and whether the Senate and Obama will go along with it or bring the country into default.

Reid, Obama and Pelosi are not good enough negotiators to get the House Republicans to go along with any tax increases on anyone in any form. It seems unlikely they’re going to let someone else negotiate for them – but that would give them some hope of ‘revenue neutral’ adjustments of closing loopholes and lowering general tax rates. Even a good negotiator probably couldn’t get new revenue of any sort past the house.

Jul 16, 2011 2:41am EDT  --  Report as abuse
akcoins wrote:
Every time the Dems come up with compromise the Cons raise the bar. They are not even trying to solve the problem.

Jul 16, 2011 3:20am EDT  --  Report as abuse
ginchinchili wrote:
Not raising the debt ceiling would just be a really, really stupid thing to do. It’s frightening that so many people on the right are either unwilling to or incapable of understanding the significance of not raising the debt limit. Serious minded people know that this MUST be done or it will end up costing us a LOT of money. Even the serious heads in the Republican Party, the few who are left, but the extremists are calling the shots in the Republican Party. Wall Street knows it’s got to be done. The banking industry knows it. Moody’s knows it. I just read a Reuters report that Germany is watching closely, but are assuming that better minds will prevail and the debt limit will be raised. It seems like everyone knows it except the rightwing extremists and it is them who are driving this thing off a cliff.

What I don’t understand is that on one hand rightwingers say the federal government must, in effect, be more responsible with our money. Yet not increasing the debt limit will cost the US tax payer billions, an expenditure that will give us nothing in return. If we’re going to do that, why not instead use that money to build infrastructure and create jobs rather than throw it away on higher interest rates? Republican thinking doesn’t make real sense.

It’s like having a mortgage payment come due and your bank has been making you mad so you decide that you’ll make a statement by refusing to pay your mortgage, even though the bank tells you there will be a 50% late fee on your mortgage payment if you pay it late. All you will manage to accomplish is that you’ll have to pay a lot more money. That’s not a very smart tactic. That’s the Republican tactic.

I think this whole ugly episode has made, well, many things quite clear. One of them is just how enslaved a lot of people on the right are to the rightwing media. They swallow anything they are told without questioning it. People listening to mostly FOX News will hear the talking heads and folks like Michelle Bachmann saying that not raising the debt limit won’t hurt a thing. They are dangerously misinformed or under-informed, or just plain stupid. Yet, the American citizens who hear only the rightwing media form their views of the world according to the rightwing extremists and oftentimes what they say is just plain wrong, like in this case about how refusing to raise the debt limit will have no negative consequences. What are they basing that on? A tale told by an idiot, full of sound and fury, signifying nothing.

It begs the question, suppose Michelle Bachmann and others are wrong about there being no need to raise the debt limit, or suppose they’re wrong about something else, anything else: What would it take for rightwing media followers to disagree with their rightwing media source and believe an alternative source? Is it even possible?

Or to look at it another way, FOX News had better be accurate 100% of the time or there will be millions of Americans misinformed and no way to correct their thinking. (Think, Saddam Hussein was behind the 9/11 attacks. 6 months into the Iraq War 70% of Americans believed that Saddam Hussein was behind the 9/11 attacks. This, of course, was not true.)

If enough leaders on the right started insisting that the only way to save America is to bypass our Constitution and physically force the Democrats out of the federal government, how difficult would it be to actually get enough people on the right to believe what they are being told and follow through on it? It’s something to think about, because all it would take is the right, or should I say wrong, rightwing “leader” to advocate something along those lines. If that leader is smart and charismatic enough, it would happen. Personally, I think it’s only a matter of time before it happens.

It’s clear that the Republicans and their followers no longer see democracy as a viable way of governing the United States of America. They have reached a point where they are refusing to share governing responsibilities with anyone else. There’s only room for their ideology and all other considerations are to be snuffed out by increasingly radical means.

Jul 16, 2011 3:41am EDT  --  Report as abuse
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