Obama Meetings Didn’t Ease Budget Standoff, Boehner Says

The fight between Democrats and Republicans over how to address the nation’s fiscal health continues even after a week of meetings between President Barack Obama and Republicans on Capitol Hill, House Speaker John Boehner said.

“It’s always a good thing to engage in more conversation,” Boehner, an Ohio Republican, said in an interview on ABC’s “This Week” program. “But when you get down to the bottom line, the president believes that we have to have more taxes from the American people, we’re not going to get very far.”

In meetings with lawmakers in the Democratic-majority Senate and Republican-led House over several days last week, Obama urged Democrats to be open to revisions in entitlement programs and pressed Republicans to put increases in revenue onto the negotiating table.

Boehner told ABC that raising taxes is off the table.

“The president got his tax hikes on January the 1st,” Boehner said, referring to a tax increase on top earners enacted early this year. “The talk about raising revenue is over. It’s time to deal with the spending problem.”

Entitlement Changes

Senator Bob Corker took a more flexible position in an interview on “Fox News Sunday.”

“I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue,” the Tennessee Republican told Fox.

As the White House continues to push for a broader agreement that would help economic recovery, lawmakers plan to move forward this week on competing fiscal 2014 budget blueprints.

“We’ve got to, of course, pass this budget resolution in the Senate,” Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat, said on the “Fox News Sunday” program. “And then we’re going to move to the next stage, and that is the grand bargain stage.”

Alan Krueger, the Obama administration’s chief economist, said in a March 15 Bloomberg Television interview that economic growth would be in the range of 2 percent to 3 percent this year. He also said that agreement in Congress that removed the immediate threat of default has helped boost the stock market, and emphasized an improving economy.

Market Reaction

For the week of March 11, the S&P 500 (SPX) advanced 0.6 percent to 1,560.70, its third straight weekly gain, and the Dow-Jones Industrial Average (INDU) climbed for a fourth week, adding 117.04 points, or 0.8 percent, to 14,514.11. The 30-stock index posted 10 straight days of gains through March 14, the longest winning streak since 1996.

The Senate budget proposal laid out last week by Budget Committee Chairwoman Patty Murray, a Washington Democrat, would generate almost $1 trillion in new revenue while protecting Medicare and expanding Medicaid health-care coverage for more low-income Americans. Her counterpart on the House Budget Committee, Wisconsin Republican Paul Ryan, last week proposed a plan for balancing the government’s books in 10 years by cutting $4.6 trillion.

The document is a vehicle for an eventual agreement, Ryan said yesterday on CBS’s “Face the Nation.”

“I believe the president won’t pass our budget into law, but let’s get a down payment,” Ryan said. “Let’s get a good start on the problem.”

Debt Crisis

Obama is making the case that the U.S. isn’t facing an immediate debt crisis. Further cuts to the nation’s budget deficit will occur if lawmakers don’t act to reverse the automatic cuts, known as sequestration, that went into effect on March 1, with $85 billion in reductions this year alone. Republicans are pressing for a deal that would restructure entitlement programs, including Social Security and Medicare.

“What the president is saying is our focus right now should be to get people back to work, sustain a recovery, and then reduce the deficit in a measured, balanced way,” Representative Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, said yesterday on NBC’s “Meet the Press.”

While the sequestration cuts have drawn criticism across the federal government, lawmakers have few pathways for major changes. The reductions total $1.2 trillion over nine years. Government agencies as diverse as the Justice Department and the Federal Aviation Administration are planning employee furloughs and cutbacks to adjust to the new funding levels.

Growth Reduction

The Obama administration has urged lawmakers to come to an agreement that would avert, or reshape, the spending cuts. Krueger, in the Bloomberg Television interview, said that the cuts would reduce economic growth by 0.6 percentage points.

The Congressional Budget Office projects that the economy will lose 750,000 jobs this year if the automatic spending cuts stay in effect through the Sept. 30 end of the federal fiscal year.

“I don’t know whether we can come to a big agreement,” Boehner said in the ABC interview. “If we do, it’ll be between the two parties on Capitol Hill. Hopefully we can go to conference on these budgets, and hope springs eternal in my mind.”

To contact the reporters on this story: Clea Benson in Washington at cbenson20@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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