His proposal, which he has said would bring certainty to an economy constrained by anxiety over the nation’s fiscal condition, would involve spending cuts to agency budgets, including the Pentagon’s; ending the George W. Bush-era tax cuts for the wealthiest Americans; and changing entitlement programs in ways his party has traditionally opposed.
Obama’s political advantage may fade quickly, though, if a deal cannot be reached before Aug. 2, the date the administration says the nation will begin to default on its obligations unless the borrowing limit is raised. Polls show that most Americans believe he has managed the economy poorly, and the unemployment rate’s jump to 9.2 percent in June has raised alarms within a White House looking toward reelection in 2012.
Lawmakers in both parties have refused to lift the $14.3 trillion debt limit unless the measure is accompanied by a strategy to sharply curtail borrowing.
The budget request Obama submitted to Congress in February would have required about $9.5 trillion in fresh borrowing by 2021. Under his current proposal, the debt would continue to rise, by roughly $5 trillion over the next 10 years. It would stabilize, however, as a share of the overall economy and eventually begin to fall by that measure.
“If they don’t act, then we face catastrophic damage to the American economy. And the leadership, to their credit, and I mean Republicans and Democrats, fully understand that,” Treasury Secretary Timothy F. Geithner said Sunday on NBC’s “Meet the Press.”
Boehner had been an enthusiastic partner in drafting such a deal.
But he is facing strong pressure not to accept any tax increase from a class of recalcitrant Republican House freshmen, as well as from some GOP presidential candidates, including Rep. Michele Bachmann (Minn.), who has vowed not to vote for any increase in the debt limit.
Republicans found themselves on the defensive Sunday after Boehner pulled the plug on talks with the White House, citing his conservative rank and file’s opposition to the tax increases Obama is demanding in exchange for significant changes to federal entitlement programs.
Appearing on “Fox News Sunday,” Senate Minority Leader Mitch McConnell (R-Ky.) called the White House proposal “a terrible idea” and “a job killer” at a time when the unemployment rate is rising.
After the meeting, Don Stewart, McConnell’s deputy chief of staff for communications, said in a statement, “It’s baffling that the president and his party continue to insist on massive tax hikes in the middle of a jobs crisis while refusing to take significant action on spending reductions at a time of record deficits.”