July 13 (Bloomberg) -- President Barack Obama is considering summoning congressional leaders to Camp David this weekend to find a way to cut the deficit and avoid a financial default, two people familiar with the matter said after a tense White House meeting.
Obama asked the lawmakers to decide by July 15 whether they want to do a significant deficit package or just figure out a way to raise the debt ceiling before U.S. borrowing authority expires Aug. 2, two Democratic officials said afterward.
With Democratic and Republican congressional leaders divided over how to cut the deficit, the president “got very agitated” and left the room after House Majority Leader Eric Cantor suggested a vote on a smaller deal, Cantor said. The president met with the eight top congressional leaders for close to two hours.
“Don’t call my bluff; I am going to the American people,” Obama said, according to Cantor, a Virginia Republican. The president “shoved back from the table” and left, Cantor said after the meeting.
A Democratic official disputed Cantor’s description of Obama’s departure from the room as abrupt and said the president had emphasized he believed people were engaging in too much political posturing.
The meeting followed a day of skirmishing between the two parties over how to agree on raising the national debt ceiling. Republicans have insisted for months that any debt-limit increase must be accompanied by major spending cuts and have rejected Democrats’ argument that such cuts need to be accompanied by more tax revenue from higher-income Americans.
Moody’s Investors Service said today it would consider downgrading the U.S. credit rating, adding to concern that political gridlock will lead to a default.
A final decision on a possible Camp David retreat in the Maryland mountains hasn’t been made, said the people, who requested anonymity.
Obama and the lawmakers discussed discretionary and other spending today and plan to discuss health care and revenue at a meeting scheduled for tomorrow at the White House, a Democratic official said.
Cantor told reporters that the amount of cuts under discussion has shrunk to less than $1.4 trillion in part because he said the administration is seeking additional spending on unemployment benefits and health-care programs.
Cantor said he proposed having multiple votes to raise the $14.3 trillion debt limit, which he said Obama rejected.
“We’re so far apart and going back on the momentum,” Cantor said.
The announcement by Moody’s was “the news that we have dreaded,” said House Democrat Robert Andrews of New Jersey. “I am fearing that much worse news will be right around the corner. I hope this very unwelcome news shakes people into a sense of reality.”
U.S. stock-index futures fell and the euro strengthened versus the dollar after Moody’s Investors Service said the American government may lose the Aaa credit rating it’s held since 1917.
Standard & Poor’s 500 Index futures expiring in September dropped 0.2 percent to 1,309 at 8:13 a.m. in Tokyo. The euro rose to $1.4222 from about $1.4170 before the Moody’s announcement.
House Minority Leader Nancy Pelosi, a California Democrat, said in a statement that Obama has listened to congressional leaders suggestions “at extensive meetings over the past few weeks, and now we have a responsibility to act.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, yesterday proposed a “last-choice” plan that would give Obama unilateral power to raise the national debt ceiling without approval by Republicans.
McConnell told radio host Laura Ingraham today that default “destroys your brand and would give the president an opportunity to blame Republicans for a bad economy.”
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