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Posted by on Jul 22, 2011 in Breaking News, Economy, Politics | 23 comments

STALEMATE: Boehner Walks Out of Debt Ceiling Limit Talks With Obama (UPDATED with ROUNDUP)

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Boehner, in a letter circulated to the House Republican rank and file, said he had withdrawn from the talks with Obama because “in the end, we couldn’t connect.”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).

USA Today:

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:

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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.

The Huffington Post:

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.

Talking Points Memo:

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.

The Washington Post’s Pulitizer Prize winning Eugene Robinson:

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.

The AP:

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.

Crooks and Liars’ John Amato:

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.

Former George W. Bush aide David Frum:

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.

Andrew Sullivan:

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.

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  • Jim Satterfield

    I wouldn’t be surprised if the House Republicans are willing to see a default happen. If they really believe that they were elected to shrink government instead of to focus on jobs they probably think they could successfully blame the Democrats. I think it’s a delusion, myself.

  • JSpencer

    I’ve often disagreed with Andrew Sullivan, but he’s dead right on this:

    “They (GOP) 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.”

  • EEllis

    Just to make sure everyone gets the full info here is this.

    “I have decided to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward,” Boehner said in a letter to members of the House of Representatives

    Truth of the matter is if it can’t pass it makes no difference what anyone agrees to in these meetings with Obama.

  • SteveinCH

    Based on the President’s own account, there was a deal for $2.45 trillion of which $800 billion was revenue that could have been done but for some reason, the President wanted more tax increases and Boehner walked.

    I wonder why none of Joe’s roundup noticed that fact. Couldn’t be selection bias, could it? I’m sure TPM, Eugene Robinson and C&L constitute a fair and balanced roundup ; )

  • Jim Satterfield

    Steve, if you can’t provide a link to that account you are speaking of, don’t claim it exists. And I mean something that proves that this was a done deal, not something that was being discussed.

  • SteveinCH

    Oh come on Jim, you know there have been no done deals in this process, at least none that involved any Democrats. The only done deals were the House budget and the CC&B plan both of which were passed by the House but voted down in the Senate.

    I’m simply using the President’s own words. In his press conference, he admitted that he and Boehner had agreed on $1.65 trillion in spending cuts and $800 billion in revenue increases.

    I’ll quote the passages for you if you like or you can just go back and read the transcript.

    Or you, like Joe, can continue to spin all day long and argue the adult in the room is the one who has never tabled a plan and the party that has never voted for one. I suspect this is the path you’ll take.

  • Jim Satterfield

    And then Obama said that they would roll back their demands for the extra $400 billion in revenue if the Republicans would walk back some of their demands for spending cuts. That wasn’t good enough. Steve, your own words were “there was a deal”. Make up your mind.

  • Absalon

    I’d just like to SteveinCH’s posts if democrats threatened to destroy the US economy unless they got to raise taxes a little from an already high level.

    Why is it OK for the GOP to use terrorism against its own nation because the nation refuses to be Randian enough? They already passed the budget, so the original agreement is not the problem. They just saw a chance to take everyone hostage.

  • SteveinCH

    Because Axel, the Dems in the Senate have rejected every single budget proposed. As for the argument of terrorism, passing a bill that addresses the debt ceiling is not typically described as terrorism except by the absurd followers of obscure theologies.

  • Absalon

    Threatening fiscal cataclysm unless you get your way is hostage taking. It’s a terrorist tactic.

    “Because Axel, the Dems in the Senate have rejected every single budget proposed.”

    As well they should – republican voters caused most of the mess and the resulting bill should not hurt the poor or the welfare-dependent: it should hurt the comfy and the capital owning.

    If democrats bail out republicans after two insane wars, Medicare part D and the unfunded tax breaks, then you republicans will never learn. You can’t suffer enough in my eyes.

  • SteveinCH

    An excellent and fact based post as usual with the moral reasoning of the form two wrongs make a right.

    Have a nice day.

  • Absalon

    First of all, never ever wish me a nice day.

    Second of all, tax cuts should be openly and honestly paid for with calls for cuts to welfare expenditures. First unloading on the rich and then later claiming it is welfare and entitlements what done it is insanity.

    Without the tax cuts and wars there wouldn’t be much of a problem, and the people responsible for the threat of increasing welfare expenditures are the geriatrics, the boomers and the old republican voters that can’t die off quickly enough. Their problems should not be paid for the poor and the people who *didn’t* vote for retards in 2000-2006.

    You had your fun, now you should deal with the hangover. You got to pretend the US could could still do wars, you got your tax cuts, now you should pay more in taxes rather than gut Pell grants.

    The extent of the insanity of the people you support even amounts to them demanding the individual mandate disappears, even though it is a completely unrelated issue. Everything about you is a liability to your society.

  • SteveinCH

    Your comment on the tax increases and wars is factually incorrect.

    Current deficit ($1.5 trillion)

    Cost of wars ($150 billion or so)

    Cost of tax changes (about $250 billion of which less than $100 billion are the tax increases the Dem party is comfortable with)

    Seems like $1.5 trillion is more than $350 billion, at least that’s how they taught it where I went to school

    And of course the tax cuts you are complaining about actually made the US tax code more progressive.

    Have a very nice day : )

  • Absalon

    “The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

    You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

    The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

    About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

    Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

    About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

    If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.”

    Dave Leonhardt, a non-traitorous American.

    I hope you only have nice days for as long as you live, you joke.

  • SteveinCH

    He’s also an incorrect American quoting a partisan analysis from the CBPP.

    The CBO has done a similar and nonpartisan analysis that says something a bit different.

    But since you don’t understand the analysis, it’s not surprising you were taken in.

    Have a nice day.

  • SteveK

    Cost of wars ($150 billion or so)

    Here’s a few other opinions:

    Time Magazine Dec. 26, 2008: The $1 Trillion Bill for Bush’s War on Terror

    Financial cost of the Iraq War

    • Direct costs: at least $3.2 trillion (Brown University)
    • Indirect and delayed costs: $2.4 trillion (Congressional Budget Office)

    National Priorities Project – Cost of War

  • SteveinCH

    Wow Steve K, it’s almost as if you don’t understand the difference between an annual cost and a total cost.

    Since the comparison was to the annual budget deficit, wouldn’t you think that an appropriate distinction?

  • SteveK

    Wow SteveinCH, it’s almost as if you actually believe that one years budget is responsible for, and is the cause of, the pending bankruptcy of the United States of America.

    Your penny wise and pound foolish outlook on economic stimulus, entitlements, and the GOTP’s goal of not raising the debt ceiling (basic common sense) doesn’t surprise anyone that has read your comments for any time at all.

  • SteveinCH

    Funny, I don’t recall saying that. The next 10 years and the last 10 years pretty much are responsible for the pending ratings downgrade (bankruptcy cannot happen).

    My perspective on stimulus and entitlements is formed by looking at data as opposed to repeating talking points.

    It’s funny how often you are wrong on the facts and never admit a mistake. At least it’s funny to me.

  • Absalon

    “The next 10 years and the last 10 years pretty much are responsible for the pending ratings downgrade (bankruptcy cannot happen).”

    No, that is caused by psychos being put in congress. The debt is fine, the republicans are the problem.

  • SteveinCH

    Welcome back Axel. Thanks for another highly factual contribution.

  • SteveK

    Comment read SteveinCH… Think I’ll just watch, you’re very entertaining.

    Your obsession with Axel is telling but I won’t tell a soul… I’m done. 🙂

  • EEllis

    Some facts. There hasn’t been a decrease in the public debt since 1957. Those of you who think we were paying it down under Clinton are just wrong. It’s a numbers game in order to pretend but the public debt grew the whole time. Bush did run a deficit and it was about equal to the post war average. Not saying he did a good job but even with all the programs that are exactly what most Dem’s say we need Bush was not a particularly prolific spender. The last year and a half was when the big spending came in for the Bush admin. Since at that time both the house and senate had been taken over by the Dem’s trying to blame Bush for a spending increase that he couldn’t introduce, vote on, heck influence, do anything but veto, is a bit much. At the time and in consideration of his looming departure he quite publicly deferred to the two presidential candidates as to the best response to the massive financial crises and all the Dem’s and both presidential candidates wanted to throw massive amounts of cash at the problem. Deficit Spending went from 500 billion to 1000 billion to 19000 billion then to 17000 billion all with complete Dem control of the legislature and a Dem president for those last 2 figures. While Bush was not nearly as fiscally conservative as many might want pasting the repubs as the creators of the problem is intellectually and factually incorrect. The real problem was indeed the financial collapse and the govts response to it that caused the issue. That response was led and created by the Dem’s. Now the repubs may have done almost the same thing and spent just as much if it were them, but it wasn’t. If there had been a big turn around and our deficit spending had dropped back to 400 billion because of increased economic activity the Dem’s wouldn’t have shared the credit. They don’t get to duck the blame. Especially when doing so by lying.

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