House Speaker John Boehner said he will pursue a smaller deficit reduction accord than the one that President Barack Obama is seeking because the White House won’t approve a bigger deal without tax increases.
“I believe the best approach may be to focus on producing a smaller measure,” Boehner said in a statement released by his office tonight.
“To back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington,” White House communications director Dan Pfeiffer said less than an hour after Boehner’s statement. The president believes that any deal must be premised on a “balanced approach that asks the very wealthiest and special interests to pay their fair share.”
Obama and congressional leaders are seeking a deficit- slashing deal to pave the way for a vote in Congress to increase the government’s $14.3 trillion debt limit, a move the Treasury Department says is needed by Aug. 2 to avert a default on the nation’s financial obligations.
“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes,” Boehner said in the statement after speaking by telephone with the president the day before Obama and congressional leaders are scheduled to meet at the White House.
“This is a real disappointment,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget in Washington, said in a statement. “Markets will not be persuaded by a ‘mini-deal’ that fails to address the most problematic parts of the budget and falls short of the needed $4 trillion, for long,” she said. “We should not be lulled into thinking that an election will make the necessary tough choices any easier -- more likely the hardest issues will only become more politicized.”
Behind closed doors in his Cabinet Room July 7, Obama told the lawmakers he won’t sign any agreement that fails to raise the debt limit through the 2012 election, said a congressional aide familiar with the negotiations who spoke on condition of anonymity.
Boehner told the president tonight that he wants to pursue a smaller deal along the lines of the working group led by Vice President Joe Biden.
Obama spent the weekend at Camp David, the presidential retreat in nearby Maryland, and will return tomorrow for further debt talks with congressional leaders.
Don Stewart, communications director for Senate Minority Leader Mitch McConnell, a Kentucky Republican, said McConnell, like Boehner, has “consistently said that we should cut Washington spending without raising taxes on job creators, particularly in the middle of a jobs crisis.”
The Labor Department reported yesterday that the unemployment rate in June unexpectedly climbed to 9.2 percent, the highest this year. Employers added 18,000 jobs, the weakest growth since September 2010. Payroll growth for May also was revised downward, to 25,000.
Senate Majority Leader Harry Reid, a Nevada Democrat, said in a statement that he is “disappointed that Republicans are unable to work with us to take a historic step forward.”
“We asked Republicans to consider a balanced approach that would have required shared sacrifice, but they would not,” Reid said in the statement. Still, he expressed confidence that a deal can eventually be reached to raise the debt ceiling and avert an “economic catastrophe.”
Democrats made clear that Boehner’s decision also takes major changes to entitlements like Medicare off the table.
“This decision to reject the president’s offer means as much as a trillion-dollar gulf remains between the two sides on a debt limit deal, and Republicans should be put on notice that no matter how hard they try, their plan to end Medicare as we know it will never fill in that gap,” said Senator Charles Schumer of New York in a statement.
“It’s disappointing that the Republican fixation with protecting tax breaks for corporate special interests and the very wealthy prevented them from agreeing to a balanced and broad deficit reduction plan to help our economy and our country,” Van Hollen said.
According to a Republican familiar with the discussions, taxes and entitlement issues were stumbling blocks in the negotiations. Boehner said any deal must result in spending changes and cuts that are larger than the amount of an increased debt limit.
The president has invited congressional leaders -- including Boehner to talks at the White House tomorrow. House Democratic leader Nancy Pelosi of California, Reid and McConnell will all be at the White House meeting.
During that session, he will try to break a partisan impasse over whether to include cuts in entitlement programs and tax increases in a deficit-slashing deal to pave the way for a vote limit.
Majority Leader Eric Cantor of Virginia, the House Republican point man in bipartisan debt talks led by Biden, thinks the group had identified between $2 trillion and $2.5 trillion in spending cuts. That could serve as “the framework for an agreement,” said his spokesman Brad Dayspring. Cantor abandoned earlier negotiations over the tax-increase issue.
According to an analysis by the nonpartisan Committee for a Responsible Federal Budget in Washington, there are areas of overlap in debt-reduction plans proposed by House Republicans and the White House, meaning they are likely to be included in any smaller-scale debt deal.
These include: eliminating some interest subsidies on student loans, which could save $20 billion to $65 billion over 10 years; changing the way the Pension Benefit Guarantee Corp. collects fees, to save $5 billion to $10 billion; selling excess federal property for $10 billion to $15 billion; and reducing health-care fraud and overpayments, at $10 billion to $35 billion.
To contact the reporter on this story: Kate Andersen Brower in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Tighe at email@example.com