Obama-Boehner talks collapse; each side blames the other

July 22, 2011

Debt-reduction negotiations between President Obama and House Speaker John A. Boehner collapsed Friday, derailing an effort to reach a landmark agreement to cut spending, overhaul the tax code and avert a government default.

In subsequent statements, both sides blamed the other for an impasse that threatens to plunge the nation into a fiscal crisis if the government fails to meet a looming deadline to raise the federal debt ceiling.

“It’s hard to understand why Speaker Boehner would walk away from this kind of deal,” Obama said, but Boehner (R-Ohio) countered that it was the president who walked away from an agreement on revenue increases.

“The White House moved the goal posts,” Boehner said in a press conference, demanding “more money at the last minute — and the only way to get that extra revenue was to raise taxes.”

“The vast majority of the American people believe we should have a balanced approach” between revenues and cuts, Obama told reporters. He added that he had been willing to agree to a deal that was more generous to Republican interests than to those of his fellow Democrats.

Saying that “we have now run out of time,” Obama summoned Boehner, House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) to the White House at 11 a.m. Saturday.

“They’re going to have to explain to me how it is that we are going to avoid a default,” he said. He later said he was confident that a default could be avoided.

Boehner agreed with that last point at least, saying, “No one wants to default on the full faith and credit of the United States government, and I am convinced that we will not.” He added later, “We can work together here on Capitol Hill to forge an agreement, and I’m hopeful the president will work with us.”

Boehner and Obama had been negotiating over what the speaker called a “big deal” to try to save between $3 trillion and $4 trillion in the federal budget.

Obama told reporters Friday evening that he had offered Boehner more than $1 trillion in cuts to discretionary spending — both domestic and defense — and $650 billion in cuts to entitlement programs such as Medicare, Medicaid and Social Security. He said he had sought revenues that were less than those put forward in a bipartisan plan by the Senate’s “Gang of Six.” He said the $1.2 trillion in revenues could be accomplished without raising tax rates but by eliminating loopholes, tax breaks and deductions.

“This was an extraordinarily fair deal,” Obama said. “If it was unbalanced, it was unbalanced in the direction of not enough revenue.”

Now that he has “been left at the altar a couple of times,” Obama said, the question for the Republicans is, “Can they say yes to the anything?”

About an hour later, Boehner told reporters that the two sides had agreed to $800 billion in additional revenues, but when the White House then demanded another $400 billion through tax increases, the Republican leader walked away.

“It’s not in the best interest of our country to raise taxes during this difficult economy,” Boehner said.

In a letter sent to the nearly 240 House Republicans, the speaker said that Obama was “simply not serious” about cutting entitlement spending unless large tax increases were a part of the deal.

“For these reasons, I have decided to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward,” he wrote in the letter to the Republican Conference.

House leaders are now working with Senate leaders to craft an alternative plan to raise the federal debt limit, but so far they have not reached agreement on a way to meet an Aug. 2 deadline and avert a potentially major fiscal crisis.

Word of the collapse of the talks came hours after Obama publicly reiterated his insistence that any broad deficit-reduction plan must include new tax revenue in addition to large spending cuts. Earlier Friday, the Senate rejected a bill from the Republican-controlled House that would have required a balanced-budget amendment and massive cuts, but no tax hikes.

The Senate also set aside immediate plans to consider a bipartisan measure to raise the federal debt limit and avert a government default, leaving it to the House to approve such a plan first. The moves were made in the hope that the House could pass the so-called “grand bargain” to reduce the deficit and raise the debt ceiling next week.

As Obama spoke, Senate Majority Leader Reid blamed the breakdown of the talks on Republican “ideological opposition” to eliminating tax loopholes for big business and corporate CEOs.

“I applaud President Obama for insisting that any deal to reduce our deficit be balanced between cuts and revenues. We must avert a default at all costs, so it is time to reengage in bipartisan talks on an agreement that at least accomplishes that goal,” Reid said in a statement.

His counterpart, McConnell, blamed “the president’s call for higher taxes on American families and job creators,” and he urged that congressional leaders move something to the floor very quickly.

“As I’ve said before, it’s time now for the debate to move out of a room in the White House and onto the House and Senate floors where we can debate the best approach to reducing the nation’s unsustainable debt,” McConnell said.

Earlier in the day, speaking at a town hall meeting at the University of Maryland in College Park, Obama told a largely supportive audience, “We can’t just close our deficit with spending cuts alone.” That would mean senior citizens would have to “pay a lot more for Medicare,” students would have trouble getting education loans, job training programs would be trimmed and there were be “devastating cuts” in medical and clean-energy research, he said.

“If we only did it with cuts, if we did not get any revenue to help close this gap . . . then a lot of ordinary people would be hurt, and the country as a whole would be hurt,” Obama said. “And that doesn’t make any sense. It’s not fair. And that’s why I’ve said, if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well.”

Obama and Boehner spoke a day after their talks on a far-reaching deficit-reduction plan ran into a revolt from Democrats furious that the accord appeared to include no immediate provision to raise taxes.

With 11 days left until the Treasury begins to run short of cash, Obama and Boehner were pursuing the most ambitious plan to restrain the national debt in at least 20 years. Talks focused on sharp cuts in agency spending and politically painful changes to cherished health and retirement programs aimed at saving roughly $3 trillion over the next decade.

Staff writer Felicia Sonmez contributed to this report.

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