Tags: Obama | Boehner

Obama, Boehner Close on $3 Trillion in Cuts

Thursday, 21 Jul 2011 03:15 PM

By Newsmax Wires

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WASHINGTON — In secretive endgame negotiations, President Barack Obama and House Republican leaders reached anew on Thursday for an elusive "grand bargain" deal to cut deficits by $3 to $4 trillion or more and prevent a threatened Aug. 2 government default, officials said.

House Speaker John Boehner declared that his rank and file generally stood ready to compromise in order to reach an agreement as a way of "getting our economy going again and growing jobs." Obama, in a newspaper opinion piece, said the talks provided an "opportunity to do something big and meaningful."

Reuters quoted a senior Democratic congressional aide as saying that the president and the speaker are in behind-the-scenes discussions of a possible deal that would include $3 trillion in spending cuts over 10 years to avert an unprecedented U.S. default.

Their potential agreement would include a promise of tax reform in 2012, the aide said.

White House press secretary Jay Carney and Boehner said no deal is final, and all sides said they still lack a consensus on spending cuts and tax revenue.

Carney and Boehner were responding to a New York Times story this afternoon that the two sides were close to a major deal.

"Officials knowledgeable about the conversations between the administration and Congressional leaders said the details of the potential package remained unknown but they presumed it would include cuts and adjustments in most federal programs, including Medicare,: the Times reported.

However, the report acknowledged, "officials on all sides of the tense negotiations warned that no firm deal was in hand yet, and tried to play down the progress — if only to stave off attempts to block it or influence its shape by hardliners on both sides of the debate on taxes and spending."

Boehner, an Ohio Republican, said in a Twitter message that reports of a deal are “false.”

Office of Management and Budget Director Jack Lew, leaving a briefing with Senate Democrats, said, “There is no agreement.”

“There is no progress to report,” Carney said at a briefing in Washington. He said the administration is “absolutely confident” an agreement to avert a default can be reached before an Aug. 2 deadline.

Still, 12 days before the default deadline, new hope of an agreement ran instantly into old resistance: from Republicans opposed to higher taxes and Democrats loath to cut Medicare and other benefit programs.

In a measure of concern among Democrats, party leaders spent nearly two hours meeting with Obama at the White House late Thursday.

While talks on a major, long-term agreement continued, a fresh, shorter-term backup plan appeared to be gaining momentum. Under discussion among some House Republicans, that proposal would cut spending by $1 trillion or slightly more immediately and raise the debt limit by a similar amount — enough to postpone a final reckoning until early in 2012.

Both sides maneuvered for political advantage and for leverage in negotiations about which little was publicly known.

"At the end of the day, we have a responsibility to act," said Boehner of GOP lawmakers.

Across the Capitol, however, Senate Majority Leader Harry Reid blamed some of the same Republicans — "tea party extremists," he called them — of blocking a deal.

The sometimes-conflicting information underscored the frenzied final days before a threatened default, when the Treasury would no longer be able to pay all its bills in full and the economy could go into a tailspin as interest rates spiked.

Some Democrats confided they were worried Obama would sign off on an agreement that cuts benefit programs without raising tax revenue, and they peppered Budget Director Jack Lew — in a closed-door meeting in the Senate — with questions about the high-level negotiations.

In an opinion piece in USA Today posted Thursday evening, Obama restated his call for achieving deficit reduction through "historic" amounts of spending cuts but also through "fundamental tax reform."

It was a stance Reid pointedly emphasized Thursday.

"My caucus agrees with that — and hope the president sticks with that, and I'm confident he will," the Nevada Democrat said.

One official said the White House had notified Democratic congressional leaders Wednesday night that Obama and the House leaders appeared to be were closing in on a deal said to include $3 trillion in spending cuts but only a promise of higher revenues to be realized through a comprehensive overhaul of the tax code.

Boehner walked a difficult line of his own, not wanting to anger conservatives who hoped — despite every appearance to the contrary — that they could push far deeper cuts through the Senate in the next few days.

"There is no deal. No deal publicly, no deal privately, there is absolutely no deal," he told conservative talk show radio host Rush Limbaugh.

Another Democratic official said that in fact progress had been made, but Boehner's office declined to say as much.

"While we are keeping the lines of communication open, there is no 'deal' and no progress to report," said spokesman Michael Steel.

The government's debt stands at a record $14.3 trillion and has been growing by more than $1 trillion a year. Obama's request for an increase prompted Boehner to say months ago that any rise must be accompanied by spending cuts of at least the same amount.

Publicly, some Republicans insisted they would not entertain any fallback measure as long as a separate House-passed bill was pending in the Senate.

That measure would raise the debt limit by $2.4 trillion while requiring an estimated $6 trillion in cuts and a congressional vote to send the states a constitutional balanced budget amendment for ratification.

Sen. Jim DeMint, R-S.C. an influential conservative, said that bill was "the only one that can pass before the Aug. 2 deadline."

But Reid said the legislation "doesn't have one chance in a million of passing the Senate," and privately senior Republicans in both houses were operating on the assumption that it would fail when the vote was taken.

Initially, that vote was set for Saturday, to be followed by an unveiling of an earlier fallback plan crafted by Reid and Senate Republican leader Mitch McConnell of Kentucky. At mid-day, though, Reid announced without explanation the Senate would formally reject the House-passed bill on Friday.

In another measure of the unpredictable nature of the debate, still another proposal — a bipartisan deficit-reduction plan that drew surprising support from Republican senators earlier in the week — appeared to be running into obstacles.

That plan includes $1 trillion in what its authors delicately call "additional revenue" in order to achieve overall deficit cuts of nearly $4 trillion.

Some Republicans say that means tax increases, a deal killer as far as they are concerned.

Obama latched onto that "Gang of Six" blueprint earlier in the week to announce a final stab at a "grand bargain" agreement.

In fact, though, he and Boehner have been in negotiations for weeks, despite setbacks, and in recent days, House Majority Leader Eric Cantor has joined the talks.

The two GOP leaders met with the president at the White House on Wednesday night. Afterward, the White House contacted Reid and House Democratic leader Nancy Pelosi with an update, according to numerous officials.

A bipartisan group of senators called the ‘Gang of Six’ outlined a $3.7 trillion deficit-reduction plan and Obama embraced it this week. Some Republicans have endorsed it or signaled openness to considering it; nevertheless that plan seems to have taken a back seat.

Boehner told reporters he has prepared his membership for the possibility of a compromise with Democrats to raise the debt limit and that he believed a majority of the 240 Republicans are prepared to do so. “We have a responsibility to act,” said Boehner.

Standard & Poor’s warned there is a 50 percent chance it will lower the U.S. government’s AAA credit rating by one or more levels within three months. S&P said today that, even if Congress raises the debt limit in time to avert a default, it might lower the U.S. sovereign rating to AA+ with a negative outlook if it isn’t accompanied by a “credible solution” on the debt level.

‘Modestly Rise’

Such a ratings change, which could come as soon as early August, would “modestly raise” the federal government’s borrowing costs, S&P said. If the U.S. defaults on some obligations, even if it pays bondholders, after Aug. 2, S&P forecast short-term interest rates would rise by 50 basis points or 0.50 percentage points and long-term interest rates by 100 basis points or 1 percentage point.

Reid of Nevada said today the House’s decision to be out of session this weekend presents “a bad picture” to Americans as the deadline nears for possible default on federal debt.

“It’s just untoward -- that’s the kindest word I can say - - to have the House of Representatives out this weekend,” Reid said on the Senate floor. “We are running out of time.”



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