First Rep. Eric Cantor walked out of talks with Vice President Joe Biden on raising the debt ceiling limit — and now Majority Leader John Boehner has walked out on talks with President Barack Obama. Consider this crisis now extra grave — although there have been predictions it would reach this stage and eventually be settled in the Senate. And it’s likely some of the crisis status could be reflected in the behavior of the stock market next week:
President Barack Obama said Friday night that House Speaker John Boehner was “walking away” from negotiations to the nation’s debt ceiling and avert financial catastrophe.
Still, Obama said he was expecting congressional leaders from both parties at the White House Saturday morning.
In a dramatic appearance in the White House briefing room Obama said it was up to congressional leaders to explain to him how they intend to avoid the default that is threatened after Aug. 2.
“I expect them to have an answer in terms of how they intend to get this thing done in the course of the next week. The American people expect action,” Obama said.
“This was an extraordinary fair deal,” said the president. “If it was unbalanced, it was unbalanced in the direction of not enough revenue.”
He said Republicans need to ask themselves, “Can they say ‘yes’ to anything?”
“We have now run out of time,” said Obama. “What we’re not going to do is continue to play games and string this along,” said the president. “I’ve been left at the altar now a couple of times.”
He added, “I cannot believe that Congress would be that irresponsible that they would not pass a package to avoid a self inflicted wound.”
Boehner, in a letter circulated to the House Republican rank and file, said he had withdrawn from the talks with Obama because “in the end, we couldn’t connect.” He said he would turn instead to negotiations with leaders of the Senate, which is controlled by majority Democrats.
The disconnect in the talks with the White House, Boehner said, was “not because of different personalities, but because of different visions for our country.
Translation: the Tea Party has continued control over GOP leaders. actions in Congress. If a Senate plan is not worked out, it is likely that the U.S. will slip into default. (Read this column written earlier this week).
Senate Minority Leader Mitch McConnell, R-Ky., responded to Boehner’s announcement by saying “it’s time now for the debate to move out of a room in the White House and on to the House and Senate floors where we can debate the best approach to reducing the nation’s unsustainable debt.”
Obama said he was willing to “take heat” from fellow Democrats on big program cuts, but Republicans decided to “walk away” in order to avoid higher taxes on the wealthy.
“There doesn’t seem to be a capacity for them to say yes,” Obama said.
House Republican leader Eric Cantor, Boehner’s top lieutenant, attributed the impasse to “the Democrats’ insistence on raising taxes on small businesses and working families.
Video of Obama’s statement:
Obama denied that last-minute objections from Democrats killed the deal.
Nevertheless, he added that he was confident the debt ceiling would be raised before the Aug. 2 deadline.
Obama also said he would insist that Congress extend the debt-ceiling increase and that it would have to last through next November’s presidential elections: “We are not going to continue to play games and string this along for another eight to nine months, and then have to go through this exercise all over again.”
He disclosed that he has begun to discuss the consequences of a failure to increase the debt ceiling with Treasury Secretary Timothy Geithner about. “It is very important that Wall Street will be opening on Monday, and we better have some answers during the course of the next several days,” Obama commented.
Friday morning, a source familiar with the negotiations told HuffPost’s Michael McAuliffe and Jennifer Bendery that he suspected the talks would eventually fail and the McConnell plan would move, shifting the unpalatable responsibility for cutting and lifting the debt cap to President Obama.
“No one wants to punt until default is the only other option,” the Democratic aide said.
The HuffPo also has this from Senate Majority Leader Harry Reid:
“Republicans have once again proven unable to overcome their ideological opposition to ending taxpayer-funded giveaways for millionaires, corporate jet owners and oil companies. I applaud President Obama for insisting that any deal to reduce our deficit be balanced between cuts and revenues. We must avert a default at all costs, so it is time to reengage in bipartisan talks on an agreement that at least accomplishes that goal. I agree with President Obama that a short-term extension is unacceptable.”
The problem for the Republicans so far: polls have showed that most Americans are not buying the argument that Obama is inflexible and the obstacle to a solution. And now there is more than one Republican leader who has walked out on a top administration official.
I’ve predicted it before (before polls show movement in that direction) and will predict it again: this will not play well with independent voters, even those independents who lean towards the GOP or are former Republicans. Many independents who were Republicans are independent because they are not pleased with the direction of their party.
Essentially what we had offered Speaker Boehner was “over a trillion dollars in cuts to discretionary spending,” Obama said. “Both domestic and defense.”
“We then offered an additional $650 billion in cuts to entitlement programs,” he added. “Medicare, Medicaid, Social Security.”
In return, Obama said he asked for $1.2 trillion in revenues, none of it coming from tax rate increases.
“It’s hard to understand why Speaker Boehner would walk away from this kind of deal,” Obama said. He asked about the Republicans: “Can they say yes to anything?”
UPDATE: Note this from The Politico:
Indeed, despite Boehner’s disclaimer, the outlines of a $3 trillion-plus deficit reduction package had been in place including what would have been substantial savings in Medicare and more than $1 trillion from appropriations over the next decade. Republican leadership aides, who briefed reporters on the talks, credited the administration with committing to structural changes to Medicare as well to try to bend the cost curve in a second 10 year period after 2021 as well.
Yet as in the past, revenues proved a major stumbling block even when the two sides initially thought they had the makings of a deal built around the shared goal of tax reform.
Boehner was willing to accept the $36.288 target as the “ceiling” for reform and that represents some concession on his part since the House budget resolution this spring set out an even lower revenue target of about $34.9 trillion.
At a White House meeting last Sunday, Treasury Secretary Timothy Geithner signed off, leadership aides said, on the $36.288 trillion number –which was also lower than what the administration has request in an earlier round of talks week ago. And with that potential compromise in place, Boehner felt encouraged to proceed with the talks.
Circumstances changed, Republicans said, after the Gang of Six came out with its plan that assumed $1.2 trillion in added revenues beyond the commission baseline. This put the White House is an awkward position since liberal Democrats were sure to demand as much especially with the domestic spending cuts assumed in the Obama-Boehner negotiations.
Leadership aides said the White House then asked to go up closer to $36.6 trillion—a numbers not far off what the president had wanted in earlier talks with Boehner. But that put the speaker in an awkward situation, requiring him to backtrack and face the wrath of anti-tax tea party forces in his conference.
No, we haven’t seen President Obama this angry — not that I can recall, at least. Mentioning that he was not able to get his phone calls returned from House Speaker John Boehner (R-Ohio) this afternoon was the Obama version of blind rage. He has always seemed to take pride in ignoring personal slights. This one he obviously took, well, personally.
Robinson felt the deal being discussed by Boehner and Obama was “lousy” and he adds:
I have one suggestion for Saturday’s meeting: The president shouldn’t ask, he should tell.
The theory that this White House has always followed is that legislation has to have its gestation on Capitol Hill. You can argue whether that’s the right or wrong approach, as a general rule, but right now we’re out of time. If what Obama wants is the Senate Minority Leader Mitch McConnell (R-Ky.) plan, in which the president basically gets to raise the debt ceiling on his own — and take all the political heat — then he should demand it, clearly, with no ambiguity. This exercise has proved that Tea Party Republicans in the House cannot be brought into a compromise deal. The only solution, then, is a deal that leaves them out — that passes the House with Democratic and non-Tea Party votes, and that is bulled through the Senate with Majority Leader Harry Reid (D-Nev.) and McConnell joining forces to keep the thing on the rails.
Boehner may say that’s impossible. But so far, everything has proved impossible — even compromises that were heavily weighted to the GOP position. At this point, clear and specific demands are in order. With a deadline. It was fine to look for a deal, but that’s not what the country needs right now. It needs action.
President Barack Obama for the first time has allowed for the possibility that the U.S. may default on its financial obligations.
At a hastily arranged White House appearance on Friday, Obama said: “If we default, then we’re going to have to make adjustments.”
But minutes later, the president said he remained confident that the debt limit will be extended.
There wasn’t time for the Grand Bargain and I’m happy about that. We’ll see where it goes from here. It’s clear President Obama wanted a big deal and we all saw how powerful the bully pulpit is because now Americans want the debt ceiling raised and they’d like a compromise. A couple of weeks ago, most Americans agreed with the Tea Party and didn’t want the debt ceiling raised at all. This is a tactic I find annoying by the administration. Even if they win some sort of victory, the dialogue has shifted hard to the right over cuts and not spending and revenues to kick start this economy. That’s a bad spot for a Democratic President to put himself in and for his Congressional brethren as well.
If only he used the bully pulpit more often and in progressive terms…Anyway…this soap opera continues.
There’s blame for all in the debt talk breakdown.
The president walked away from Simpson-Bowles, declined to present plans to reach long-term budget balance, etc. etc. etc.
But in the argy-bargy, keep this in mind: the debt problem has become a debt crisis for one reason only: because Republicans put the threat of debt default on the table.
That never needed to happen.
That never needed to happen.
House Republicans could have kept the debt ceiling issue wholly separate from the budget cut issue.
Instead, Republicans put the gun on the table. They raised the menace of deliberate default in a way it has not been raised before.
Then, having issued the threat, they discovered that their own core supporters would not allow the gun to be holstered again.
I’ve often noted: Frum is the voice of those Republicans who are deeply concerned about the direction of their party — a party increasingly influenced by wealthy jet-setting talk show hosts who need to whip up uncompromising partisanship to deliver demographics to advertisers and a Tea Party movement that started out criticizing both parties but has now become a 21st century incarnation of what would have been a far right wing Republican group in the 1960s.
The Republican refusal to countenance any way to raise revenues to tackle the massive debt incurred largely on their watch and from a recession which started under Obama’s predecessor makes one thing clear. They are not a political party in government; they are a radical faction that refuses to participate meaningfully in the give and take the Founders firmly believed should be at the center of American government. They are not conservatives in this sense. They are anarchists.
Their fiscal anarchism has now led to their threat to destabilize and possibly upend the American and global economy because they refuse to compromise an inch. They control only one part of the government, and yet they hold all of it hostage. I cannot believe they are prepared to allow the US to default rather than give an inch toward responsibility. Except I should believe it by now. Everything I have written about them leads inexorably to this moment. Opposing overwhelming public opinion on the need for a mixed package of tax hikes and spending cuts, drawing the president into a position far to the right of the right of his party, and posturing absurdly as fiscal conservatives, they are in fact anti-tax and anti-government fanatics, and this is their moment of maximal destruction.
Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion in assets, told Reuters: “If not reversed within the next few days through crisis negotiations, this breakdown will be highly detrimental to the already-fragile health of both the US and global economies.”
The rancorous breakdown in talks came after Obama earlier on Friday said he was prepared to make “tough choices” for a sweeping deficit-reduction deal to avert a default, despite Democrats warning him not to make too many concessions.
The Democratic president at the time appealed for compromise by both parties as he and Boehner, the top Republican in Congress, pursued a plan for up to $3 trillion in spending cuts.
Obama had faced increasingly vocal complaints from his own Democrats on a deal-in-the-making that could mean painful curbs in popular health and retirement programs but no immediate increase in taxes.
Republicans have refused to accept a deal for raising the debt limit if it includes revenue increases.
Attention now turns to the Senate, where negotiations are likely to resume on a convoluted plan put forth by Republican Senate leader Mitch McConnell that intended as a fallback option if all else failed.
Boehner’s statement to the press:
The Daily Beast’s Howard Kurtz:
Never overestimate the ability of Washington’s polarized politicians to fumble away a disagreement, even with the country’s ability to pay its debts on the line.
Contrary to an overly optimistic report in The New York Times that President Obama and John Boehner were close to a deal—and despite a swirl of bipartisan plans—the budget talks collapsed Friday.
The House speaker called Obama and said he is walking away from the talks, prompting the president to appear before the cameras in the White House briefing room half an hour later, just after 6 p.m….
…Asked by CNN’s Jessica Yellin whether he could guarantee that Social Security checks will go out after the August 2 deadline, the president fired a shot at the Republicans, saying “they would have to take responsibility” for any adjustments that are made in the event of default.
Boehner’s move and Obama’s countermove may turn out to be last-minute theatrics before both parties agree to a short-term extension of the debt ceiling. Neither side believes it can benefit if the government slides into default, but both parties are trying to extract the maximum leverage from the crisis. The problem is that time is so short that a complicated deal has become all but impossible.