* Obama-Boehner negotiations collapse
* Democrats were furious over shape of deal emerging
(Adds quotes and details)
By Andy Sullivan and Matt Spetalnick
WASHINGTON, July 22 U.S. House Speaker John
Boehner broke off talks with President Barack Obama on Friday
on a deficit-reduction deal to prevent a devastating default
and said he would try to hammer out an agreement through the
In a dramatic turn of events with the deadline to raise the
U.S. debt ceiling just 11 days away, a stern-faced Obama
expressed frustration at the Republican leader's move, saying
it was "hard to understand why Speaker Boehner would walk away
from this kind of deal."
Boehner, in a letter to fellow lawmakers, said he and Obama
were unable to reach agreement on a broad deficit reduction
package they had been negotiating and that the two "had
different visions for our country."
A deep divide over tax revenue was at the heart of the
collapse in negotiations, which derailed an effort to craft a
sweeping $3 trillion deficit-cutting plan that now seems beyond
reach. Both sides blamed the other for the impasse.
Full coverage of U.S. budget and debt [ID:nUSBUDGET]
Possible outcomes for U.S. debt talks [ID:nN1E76I10Y]
Anything possible if U.S. downgraded [ID:nN1E76I1M8]
With the Aug. 2 deadline fast approaching for Congress to
increase the $14.3 trillion debt ceiling, Boehner said he would
begin talks with Senate leaders to "in an effort to find a path
forward." An aide said a deal needs to be set by Monday.
"We have now run out of time," Obama told reporters. He
insisted he had made an "extraordinarily fair" offer to Boehner
but when the Republican stopped returning his calls on Friday
it became clear that he would not accept it.
The president said he was summoning Democratic and
Republican leaders to the White House on Saturday in a
last-ditch effort to find a path forward on raising the debt
Failure to act could push the United States back into
recession and unleash global financial chaos.
Obama warned that failure to reach an agreement on the debt
ceiling would also increase the chance of a harmful downgrade
in America's top-notch credit rating.
Putting the onus on Obama, Boehner said: "The president is
emphatic that taxes have to be raised. As a former small
businessman, I know tax increases destroy jobs.
Mohamed El-Erian, co-chief investment officer at Pacific
Investment Management Co., which oversees $1.2 trillion in
assets, told Reuters: "If not reversed within the next few days
through crisis negotiations, this breakdown will be highly
detrimental to the already-fragile health of both the US and
The rancorous breakdown in talks came after Obama earlier
on Friday said he was prepared to make "tough choices" for a
sweeping deficit-reduction deal to avert a default, despite
Democrats warning him not to make too many concessions.
The Democratic president at the time appealed for
compromise by both parties as he and Boehner, the top
Republican in Congress, pursued a plan for up to $3 trillion in
Obama had faced increasingly vocal complaints from his own
Democrats on a deal-in-the-making that could mean painful curbs
in popular health and retirement programs but no immediate
increase in taxes.
Republicans have refused to accept a deal for raising the
debt limit if it includes revenue increases.
Attention now turns to the Senate, where negotiations are
likely to resume on a convoluted plan put forth by Republican
Senate leader Mitch McConnell that intended as a fallback
option if all else failed.
(Additional reporting by Andy Sullivan, Thomas Ferraro, Donna
Smith, Richard Cowan, Steve Holland, Alister Bull, Laura
MacInnis and Rachelle Younglai; Writing by Matt Spetalnick and
Kristin Roberts; Editing by Vicki Allen)