This article appeared before his news conference this morning:
Before negotiations resume, Obama says ‘now is the time’ for major deal on debt
President Obama, facing a bitter partisan stalemate over how to raise the federal borrowing limit, summoned congressional leaders to a new round of White House talks Monday and warned that he would not accept a temporary, stopgap measure.
“That is not an acceptable approach,” he told a news conference. “So we might as well do it now. Pull off the bandaid. Eat our peas. Now is the time to do it. If not now, when?”
Negotiations on Sunday failed to forge agreement, leaving the talks deadlocked, a historic default looming and a fragile economy increasingly vulnerable to the consequences of Washington’s entrenched partisanship and ideological divide over taxes and entitlements.
With three weeks remaining before the administration says the country will begin to default, Obama told the group to expect to meet daily until a deal is reached, said a Democratic official familiar with the talks.
Obama spoke Monday ahead of a scheduled 2 p.m. meeting with congressional leaders to continue negotiations that appeared to founder Sunday. He said he was prepared to hold meetings every day until the issue is resolved.
Participants in the Monday session included four Republican lawmakers and four Democrats, the White House said. The GOP attendees on the list were House Speaker John A. Boehner (Ohio), Senate Minority Leader Mitch McConnell (Ky.), House Majority Leader Eric Cantor (Va.) and Senate Minority Whip Jon Kyl (Ariz.). The Democrats were Senate Majority Leader Harry M. Reid (Nev.), House Minority Leader Nancy Pelosi (Calif.), Senate Majority Whip Richard J. Durbin (Ill.) and House Minority Whip Steny H. Hoyer (Md.).
On Sunday, the White House meeting adjourned after roughly 75 minutes without agreement over how far the parties should go in cutting the deficit over the next decade or whether tax cuts and entitlement reductions should be a part of any deal.
Boehner jolted the negotiations Saturday when he announced that his party would not support the larger deficit-cutting plan Obama has proposed because it includes tax increases, complicating the meeting’s agenda.
According to the Democratic official, Obama asked Republican leaders, “If not now, when?”
The enduring disagreement, drawn sharply along partisan lines as an election year approaches, brought warnings from the administration and congressional Democrats that, unless a deal is reached within two weeks — to give Congress time to approve it — the United States would default on its fiscal obligations for the first time.
Asked whether the parties could reach a deal in the next 10 days, Obama, flanked by congressional leaders in the Cabinet Room before the meeting, said simply, “We need to.”
The Democratic official, who spoke on condition of anonymity, said Obama began Sunday’s negotiating session by recounting the nature of the compromise that had been under discussion before Boehner’s announcement. He pushed for the larger plan throughout the meeting.
The president reminded Boehner that the speaker had admitted that a smaller deal could be just as difficult to push through Congress as a large one, and he challenged Republicans to return to the White House on Monday with a plan to secure the 218 votes needed for a measure to pass the House.
“The president pushed to do something real and not just kick the can down the road,” said a senior administration official. “He said he was ready, willing and able to make the hard choices and hoped they would join him.”
Republican leaders, meanwhile, suggested that a “contingency plan” is in the works to raise the debt ceiling if the gulf between the parties could not be bridged. Obama has dismissed incremental steps, saying that now is the moment to address the underlying causes of fiscal imbalance.
After weeks of debate, Obama may have a tenuous hold on the political high ground as he takes on a more visible role, urging party leaders to set aside ideology to trim an estimated $4 trillion from the deficit over the next decade.
Obama’s political strategy since his party lost the midterm elections has been to portray himself as a reasonable man in partisan Washington, at times angering Republicans and Democrats in doing so.
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,” McConnell 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.”
The Republican position sent negotiators back to the drawing board. Boehner, for one, has suggested reexamining the smaller measure that had been under discussion in bipartisan talks led by Vice President Biden. The approach aimed to reduce borrowing by about $2.4 trillion over the next decade.
Boehner, Cantor and Kyl pushed during the Sunday meeting for an agreement of roughly that size, according to the Democratic official.
“The speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward,’’ said a Boehner aide. “The speaker restated the fundamental principles that must be met for any increase in the debt limit: spending cuts and reforms that are greater than the amount of the increase, restraints on future spending, and no tax hikes.’’
The Biden approach has problems as well, and aides in both parties questioned whether it offers a realistic path to compromise. Negotiators were still struggling to meet the $2.4 trillion goal when the talks broke up over taxes. Aides in both parties said a consensus had formed around only about $1.5 trillion in savings.
Of that, a little more than $1 trillion came from agency budgets.
The rest of the savings were split about evenly between health programs — primarily Medicare and Medicaid — and other direct-payment programs. Negotiators were also considering changes to Social Security, such as using a different measure of inflation that would have the effect of reducing payouts.
But absent GOP agreement on a Democratic request for as much as $400 billion in tax hikes on the wealthy and corporations, Democrats were reluctant to put the popular entitlement program on the table.
Without Social Security changes and tax increases, aides in both parties said, it had proved virtually impossible to push savings up to the Biden goal. Returning now to that framework may present not only problems of mathematics but political problems as well, said Ed Lorenzen, a budget analyst for the Obama fiscal commission who now works with the bipartisan Committee for a Responsible Federal Budget.
For example, Lorenzen said, farm state lawmakers may have been willing to absorb a big hit in a package that aims to solve the nation’s budget problems. But, he said, “it will be harder to sell deep ag cuts if the perception is that farm subsidies make up a disproportionate share of the smaller deal.”
Although his party and the White House appear far from an agreement, McConnell pledged Sunday to raise the federal debt limit in time to avert a default.
“Nobody is talking about not raising the debt ceiling. I haven’t heard that discussed by anybody,” McConnell said, adding that he would describe a “contingency plan” later this week if a deal isn’t reached.
Republican aides declined to discuss that plan, but McConnell has in recent weeks suggested that even the Biden framework is too ambitious and that lawmakers may need an alternative that cuts spending by a modest amount in exchange for a much shorter increase in the debt ceiling.
White House Chief of Staff William M. Daley and Geithner said on the Sunday talk shows that Obama remains committed to achieving the large deal he has outlined.
“He’s not someone to walk away from a tough fight. This is a very tough political fight, no question about it,” Daley said on ABC’s “This Week.” “But he didn’t come to this town to do little things. He came to do big things.”
Daley called Boehner’s abandonment of a broad deal “unfortunate,” adding that “everyone agrees that a number around $4 trillion is the number that will . . . make a serious dent on our deficit.”
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