(boehner's office emails obama on July 22)
WASHINGTON, July 22 President Barack Obama and
House Speaker John Boehner had agreed on the rough outlines of
a far-reaching budget deal that would allow the United States
to avert an imminent default before Boehner broke off talks on
Here is a summary of what the two sides had agreed upon,
where they had differed, and how things fell apart:
FRIDAY, JULY 15
Boehner and his deputy, House Republican Leader Eric
Cantor, lay out a proposal to White House Chief of Staff Bill
Daley and Treasury Secretary Timothy Geithner in a meeting at
The deal envisions a two-step process, in which Congress
would avert an Aug. 2 default by raising the debt ceiling and
agreeing to caps on the annual discretionary spending that
covers everything from the military to national parks.
Congress would only raise the debt ceiling by enough money
to cover the country's borrowing needs for six to eight months
-- roughly $900 billion to $1.2 trillion.
During that time, Congress would tackle far-reaching
reforms to health benefit programs and the Social Security
The Republicans propose simplifying the tax code to
eliminate loopholes and deductions, resulting in three
The top rate would be lower than the 35 percent rate
currently in place, and as close as possible to a new, lowered
corporate tax rate below 30 percent. This would minimize the
penalty for small-business owners who file their taxes as
Under this scenario, the government would collect $36.2
trillion over 10 years -- $800 billion more than it would
collect if temporary tax breaks enacted under President George
W. Bush were allowed to expire. Republicans say the additional
revenue would come from a revitalized economy under a simpler
tax scheme, not increased levels of taxation.
SUNDAY, JULY 17
The same four negotiators met at the White House in the
late morning, joined by White House budget director Jacob Lew.
Obama appears briefly.
Geithner indicates he is comfortable with the Republicans'
tax proposal, according to Republican aides. The two sides
differ on the extent of the proposed cuts to discretionary and
The main difference at this point is how to ensure that
Congress will act on the reforms within the time frame.
Democrats say they are uncomfortable with the short-term
debt-ceiling hike the Republicans had proposed, pushing instead
for an increase that would cover the country's borrowing needs
through the November 2012 elections, according to Republicans.
Instead, they propose a different set of "triggers." Tax
rates on the wealthy would rise back to their 1990s levels --
which would cause political pain for Republicans -- while
Medicare and Medicaid, the health plans for the elderly and the
poor, would suffer a total of $425 billion in budget cuts.
TUESDAY, JULY 19
A bipartisan group of senators known as the "Gang of Six"
releases a budget proposal of their own, which calls for a
higher overall tax figure. That proposal is received warmly by
Democrats and Republicans in the Senate.
That evening, the White House proposes changes to the tax
rewrite, saying that the "Gang of Six" had given them political
momentum, according to Republicans. They propose a new revenue
figure of $36.6 trillion, $400 billion above the previous
level, and say it should serve as a minimum, not a maximum,
The White House also says it does not agree with the
Republican proposal that the top income tax rate does not
exceed 35 percent, or that it should be close to the lower
WEDNESDAY, JULY 20
Boehner and Cantor meet with Obama and Vice President Joe
Biden at the White House. The discussion centers around the
trigger: Republicans argue that slashing Medicare and Medicaid
would cause political pain for both parties, not just
Democrats. Instead, they propose that two central elements of
Obama's new healthcare reform -- the requirement that
individuals buy health insurance, and an independent board to
oversee Medicare -- be struck from that law.
The two sides by this point have reached agreement on a
number of other areas.
They have agreed to cut discretionary spending by $1.2
trillion over 10 years, with a guaranteed portion of that
coming from the military and other security programs that
Republicans normally protect. They have agreed to count an
anticipated $1 trillion in savings from winding down the wars
in Iraq and Afghanistan, according to the White House.
On benefit programs, they have agreed to slow the growth of
Social Security benefits by changing the way they are indexed
On health programs, they have agreed to gradually raise the
Medicare eligibility age from 65 to 67, negotiating lower
prices for prescription drugs, and making other administrative
THURSDAY, JULY 21
The White House refuses the Republican proposal to change
its trigger from Medicare and Medicaid to its signature
health-reform law. Boehner says he could not sell his fellow
Republicans on the higher tax revenues sought by the White
House. According to the White House, the two sides still
disagree over the amount that would be saved by the Medicaid
overhaul as well -- $120 billion vs. $150 billion.
According to the White House, Obama tries to call Boehner
in the evening, but does not hear back.
FRIDAY, JULY 22
Boehner's office emailed back at 3:30 in the afternoon,
according to the White House, and says he would not be able to
speak with Obama until 5:30 p.m.
At 5:00 p.m., Boehner jokes with reporters in his office
suite. His staff breaks the news that talks have broken down.
At 5.30 p.m., Boehner tells Obama he does not think they can
move forward with the negotiations.
(Reporting by Andy Sullivan and Alister Bull)