Political Highlights Debt Ceiling Showdown Recap July 18-24, 2011: 2 Plans, 8 Days No Debt Deal in Sight — Will the US Default on August 2, 2011?

POLITICAL HIGHLIGHTS

By Bonnie K. Goodman

Ms. Goodman is the Editor of History Musings. She has a BA in History & Art History & a Masters in Library and Information Studies from McGill University, and has done graduate work in history at Concordia University.

THE HEADLINES: DEBT CEILING SHOWDOWN: OBAMA VS CONGRESSIONAL LEADERS: JULY 18-24, 2011

  • Factbox: How the Obama/Boehner debt talks unraveled: President Barack Obama and House Speaker John Boehner had agreed on the rough outlines of a far-reaching budget deal that would allow the United States to avert an imminent default before Boehner broke off talks on Friday.
    Here is a summary of what the two sides had agreed upon, where they had differed, and how things fell apart… – Reuters, 7-24-11
  • Timeline: How the debt talks spiraled into crisis: With financial markets on edge, White House officials and Republican leaders scrambled to reassure them that the United States will avert default and lift its $14.3 trillion borrowing limit before August 2. Following is a timeline of the U.S. debt debate…. – Reuters, 7-24-11
  • Debt Ceiling for Dummies: Why Compromise Is so NecessaryHuff Post, 7-24-11
  • SCENARIOS-Options for raising the U.S. debt limit: Democrats and Republicans in Congress, unable to compromise on how to cut budget deficits and raise U.S. borrowing authority, are now working on their own, competing bills. With nine days’ left until the United States runs out of money to pay all its bills after Aug. 2, the two parties were rushing to get their respective bills moving through Congress this week.
    Here are some scenarios for raising the debt limit by the early August deadline to avoid a potentially crippling government default:
    AN ALL SPENDING CUTS, NO REVENUES PLAN…
    A SHORT-TERM DEBT LIMIT INCREASE…
    BLEND THE TWO IDEAS?…
    MCCONNELL “FALLBACK” PLAN…
    TALKS RESUME…
    OBAMA INVOKES THE CONSTITUTION… – Reuters, 7-24-11
  • Timeline: Debt debate, 7-11-11: President Barack Obama and top lawmakers will meet again Monday in search of a deal on slashing the U.S. budget deficit and raising the $14.3 trillion debt ceiling before the United States defaults.
    Obama wants to strike a deal well before August 2, when the Treasury Department says it will no longer be able to honor its obligations and issue new bonds without breaching the limit that Congress set on how much the United States can borrow.
    Republican and Democratic lawmakers say any increase must include measures to ensure the country’s debt remains at a sustainable level. The debt-reduction debate is a sharp shift for Washington, which less than a year ago was focused on additional deficit spending to lower the unemployment rate.
    Following is a timeline of the debate…. – Reuters, 7-11-11
  • Factbox: What’s on the table in debt talks: President Barack Obama and congressional leaders resume their White House talks on Monday to see if they have the makings of a deal to trim budget deficits and avert a looming default.
    The Treasury Department has warned it will run out of money to cover the country’s bills if Congress does not raise the $14.3 trillion debt ceiling by August 2.
    Although Democrats and Republicans agree on the need for trillions of dollars in budget savings, they remain sharply divided about how to get there.
    Following is a summary of the debate… – Reuters, 7-11-11

JULY 25, 2011: NO DEAL YET — BOEHNER & REID EACH DEVISING PLANS — BOEHNER WILL REVEAL UNLIATERAL PLAN IN THE PM FOR WEDNESDAY VOTE

  • Two Deals, No Time: It’s crunch time. Congressional leaders have at most two days to days to reach an agreement to raise the debt limit, and lawmakers have made little progress on preventing the unthinkable.
    On Sunday talks “broke down,” according to Senate Majority Leader Harry Reid (D-NV), a particularly troubling development at a point where every hour counts. While August 2nd may be the deadline, a deal must be reached no less than 5 days sooner to guarantee passage in time.
    The House of Representatives requires that bill be made available online for three calendar days before a vote. In the Senate, rules require that a cloture motion to end debate “ripen” for over a day, and even then 30 hours of debate are required.
    Democratic and Republican legislators are now set out to go it alone, with competing plans to cut the deficit and raise the debt limit, beginning a high-stakes game of chicken to see which side blinks first.
    Speaker of the House John Boehner (R-OH) is expected to lay out a two-stage deficit reduction and debt limit package to GOP lawmakers at 2 p.m. today, and release make it available publicly this afternoon to allow for a Wednesday vote.
    The Republican plan would raise the debt limit in two tranches, requiring a second vote early next year after a deficit reduction commission exacts steep spending cuts…. – Business Insider, 7-25-11
  • Three GOP leaders with three ideas on the debt: For Republicans, the debt talks have shown three leaders calling three different plays, each trying to push and pull congressional Republicans in his direction. So far, all three have failed to find a plan that all of them can support.
    Senate Minority Leader Mitch McConnell (R-Ky.) declared on June 19 that there wasn’t enough time to approve any of the plans to raise the government’s debt ceiling by the Aug. 2 deadline. He proposed a short-term hike to buy more time.
    Two days later, House Majority Leader Eric Cantor (R-Va.) declared short-term deals a non-starter and said “there are no votes” for any grand bargain including higher tax revenue.
    The next night, House Speaker John A. Boehner (R-Ohio) snuck into a secret meeting with President Obama to launch an effort for a “big deal” including hundreds of billions of dollars in new revenue.
    McConnell, Boehner and Cantor say they are on the same side and never publicly criticize one another. But for the past five weeks, each has appeared to play to different audiences inside the Grand Old Party, with different motivations, according to aides and Republican lawmakers…. – WaPo, 7-25-11

JULY 24, 2011: SPEAKER JOHN BOEHNER PROMISES DEBT CEILING PLAN BY ENDS OF DAY — FORGES AHEAD ON TWO STAGE PROCESS PLAN

Boehner tells House GOP he will press ahead with his own plan for reducing the deficit: Speaker John Boehner said in a conference call with House Republicans that he would continue to pursue a two-stage strategy that would give the Treasury only about $1 trillion in additional borrowing authority, forcing another debt-limit battle early next year.
Hours before Asian financial markets were set to open Sunday evening, House and Senate leaders are now threatening to pursue two different approaches to averting a government default.

“There will be a two-stage process; it’s just not physically possible to do all of this in one step. I know the president is worried about his next election. But my God, shouldn’t he be worried about the country? We have got a budget deficit of $1.5 trillion. We’re borrowing 42 cents on every dollar we spend, we have $14.5 trillion national debt. It is time to get serious about stopping the spending here in Washington, D.C.” — Speaker of the House John Boehner on Fox News

Obama cannot raise debt ceiling on his own: Timothy Geithner on the ABC program “This Week”: “It is not a workable option. This is not a workable option to limit the damage to the American people that would come from Congress not acting to raise the — to avoid a default crisis.”

“If you’re the leader of the free world, would you please come to microphone and quit hiding in the basement about your proposals, and come on up and address the American people? Is he chicken?
Where’s the president of the United States on the most pressing financial challenges of our country on entitlement reform? Where is his specific Medicaid reform proposal? Where is his specific Medicare reform proposal? Where is his Social Security reform proposal?
The answer is he doesn’t have one. You can’t find him publicly talking about that. He’s ducking, he’s bobbing, he’s weaving. He’s not leading, and that’s not the kind of president we need, and that’s why he needs to be removed from office.” — GOP presidential candidate Tim Pawlenty, the former Minnesota governor on CNN’s “State of the Union.”

“Now the President is outraged because the GOP House leadership called his bluff and ended discussions with him because they deemed him an obstruction to any real solution to the debt crisis. He has been deemed a lame duck president. And he is angry now because he is being treated as such.
His foreign policy strategy has been described as “leading from behind.” Well, that’s his domestic policy strategy as well. Why should he be surprised that he’s been left behind in the negotiations when he’s been leading from behind on this debt crisis? Thank you, GOP House leaders. Please don’t get wobbly on us now.” 2012 can’t come soon enough. — Sarah Palin on her Facebook Page

  • Factbox: How the Obama/Boehner debt talks unraveled: President Barack Obama and House Speaker John Boehner had agreed on the rough outlines of a far-reaching budget deal that would allow the United States to avert an imminent default before Boehner broke off talks on Friday.
    Here is a summary of what the two sides had agreed upon, where they had differed, and how things fell apart… – Reuters, 7-24-11
  • No deal yet on debt crisis. How will Asian markets and Wall Street react?: Washington’s self-imposed deadline to do something credible on the debt crisis before the Asian financial markets opened on Sunday passed in silence. “There could be extreme turmoil in markets,” says one expert…. – CS Monitor, 7-24-11
  • Boehner, Reid seek own debt proposals: With just eight days left to raise the nation’s $14.2 trillion debt ceiling, President Obama and Republican congressional leaders failed Sunday to reach a bipartisan deal, leaving both sides to devise their own solutions.
    Democratic and Republican congressional leaders were working on separate plans to raise the debt ceiling by $2.4 trillion and avoid default. Both sides said they believed a compromise was still possible.
    Obama met for 66 minutes Sunday afternoon with Sen. Harry Reid of Nevada and Rep. Nancy Pelosi of California, the two Democratic congressional leaders, but they emerged with no plan or public comment….
    Without an agreement, Reid and House Speaker John Boehner, R-Ohio, are working on two, still hazily defined, proposals… – USA Today, 7-24-11
  • Boehner Moving Ahead With Short-Term Debt Plan: House Speaker John Boehner plans to press ahead with a shorter-term increase in the U.S. debt limit than President Barack Obama has requested, he told lawmakers today, defying a veto threat and signaling continued stalemate in the U.S. Congress as time runs short for a deal.
    Boehner told rank-and-file Republicans during a conference call this afternoon that they needed to pull together as a team to block Obama, who has asked for a $2.4 trillion borrowing boost in the $14.3 trillion debt ceiling, from obtaining the money all at once, without any guarantees of spending cuts. His remarks were described on condition of anonymity by a person familiar with the discussion.
    The speaker said that no one is willing to default on the full faith and credit of the U.S., according to the person.
    The comments indicated that Boehner plans to force action on his plan to provide only a temporary borrowing boost of about $1 trillion accompanied by spending cuts of at least as much, tying the remainder of the debt-ceiling increase Obama has requested to further cuts in the future. The White House says Obama would veto such a measure…. – Bloomberg, 7-24-11
  • House GOP and Senate Democrats each prepare new debt plans: With world financial markets watching nervously, top Democrats and Republicans in Congress each scrambled Sunday to put together new proposals to avert a looming government debt default and a potential global financial crisis.
    Senate Democratic Leader Harry Reid of Nevada drafted a new plan that would allow a multi-year increase in the nation’s debt ceiling, offset by an equal or greater amount of spending cuts spread over the coming decade. Significantly, it would not include tax increases.
    House Speaker John Boehner planned to outline a new blueprint on Monday amid warnings from their leader that they must find a solution that can get through the Democratic Senate.
    They all failed to meet their own deadline for a bipartisan agreement before markets opened in Asia on Sunday evening U.S. time, the first markets to open since talks broke down at the White House Friday evening.
    Financial markets appeared to be watching cautiously, but initial trading made it clear that they were unshaken as yet.
    Market jitters are expected to rise each day from now on that the United States government fails to raise its $14.3 trillion legal limit for borrowing before its Aug. 2 deadline. If the ceiling isn’t lifted by then, that could force the government to stop paying paychecks or benefit checks — or to default for the first time in history by failing to pay bond holders debt already owed. That could panic financial markets and kick the weak U.S. economy back into recession…. – McClatchy Newspapers, 7-24-11
  • Obama, Congress fail to break debt deadlock: Lawmakers failed to achieve a budget breakthrough and instead worked on rival plans Sunday in a impasse that heightened prospects for a catastrophic debt fault.
    With time running out, Republican and Democratic lawmakers split into opposite camps and held talks among themselves. There were no signs of a deal emerging to head off a default in nine days that could trigger global economic calamity and downgrade America’s Triple-A credit rating.
    Lawmakers missed a self-imposed deadline of producing a deficit-reduction deal by the time Asian markets opened on Sunday, but planned to outline a proposal Monday. A deficit deal is needed to permit a vote to increase the $14.3 trillion U.S. debt ceiling by August 2.
    President Barack Obama heard details of a Senate Democratic plan that would rely on spending cuts, not new tax revenue, which would violate one of his key demands…. – Reuters, 7-24-11
  • No deal on debt ceiling: The day started with congressional leaders trying to resolve the dangerous impasse over the debt ceiling — and calm any anxiety markets may have when they reopened Monday.
    It ended in a continuing impasse, with each party sketching out their own plans and showing little common ground.
    Senate Majority Leader Harry Reid said he is preparing a proposal to raise the ceiling through the end of 2012 and cut $2.7 trillion in debt. The measure would not call for any tax revenue increases.
    On the other side, House Speaker John Boehner told GOP lawmakers Sunday in a conference call that he wants a deal that sticks to the principles of the Cut, Cap and Balance bill that the House passed and Senate rejected last week, sources familiar with the call told CNN.
    A key sticking point remains how much to raise the debt ceiling: Democrats want it raised enough so the issue won’t come up again until after the November 2012 election. Boehner has said that is impossible; he wants it raised in two, smaller increments.
    It remains to be seen if the two sides can resolve their conflicts soon…. – CNN Money, 7-24-11
  • ‘World News’ Political Insights: Washington Dysfunction Hits New Low: The only problem with talk of compromise is that it doesn’t have a natural constituency. Until and unless, of course, it has a huge one.
    The stand-off on debt negotiations declared late Friday begins to have real repercussions this week, as a new political player with even crasser motivations than Democrats or Republicans emerges: financial markets.
    The market reaction injects an unpredictable element into a drama that’s actually been quite predictable. Neither side is willing to move off of core principles because both sides are convinced that they’re right and that the public backs them up on it.
    Three consecutive “change” elections — two favoring Democrats, one Republicans — has created divided government. It’s also exacerbated the divide in perceptions around public sentiment, making any middle ground even more elusive.
    It isn’t that politicians don’t know that voters are angry. It’s that both sides are convinced that they’re only angry with the other side…. – ABC News, 7-24-11
  • Boehner Said to Tell Republicans No Deal Yet as Obama to Meet Pelosi, Reid: House Speaker John Boehner is telling rank-and-file Republicans that there’s no agreement on a plan for raising the debt ceiling before a default threatened for Aug. 2, a sign of continuing stalemate in the U.S. Congress as time runs short for a deal.
    A Republican congressional official said Boehner, speaking by conference call to lawmakers, is reporting that discussions are continuing on such a plan.
    Boehner told his members yesterday that he wanted to send markets a positive sign by the time Asian markets began opening this afternoon that Congress would strike a deal to break the impasse over raising the $14.3 trillion borrowing limit.
    With no evidence that such compromise has been reached, President Barack Obama will meet at 6 p.m. at the White House with Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi…. – Bloomberg, 7-24-11
  • Boehner presses ahead with unilateral debt plan: Hours before Asian financial markets were set to open Sunday evening, talks over the federal debt limit were at a standstill, and House and Senate leaders were threatening to pursue two different approaches to averting a government default in a messy legislative showdown.
    In a conference call with House Republicans, Speaker John A. Boehner (R-Ohio) said he would press ahead with a two-stage strategy that would give the Treasury only about $1 trillion in additional borrowing authority, forcing another debt-limit battle early next year with the political parties in the heat of the 2012 presidential campaign.
    “If we stick together, we can win this for the American people,” Boehner told his troops, participants said.
    Boehner promoted that strategy on Fox News Sunday, telling host Chris Wallace that “there’s going to be a two-stage process. It’s not physically possible to do all of this in one step.” In a barbed aside, he added: “I know the president’s worried about his next election. But my God, shouldn’t we be worried about the country?”… – WaPo, 7-24-11
  • Boehner tells Republicans to stay united on debt deal: House of Representatives Speaker John Boehner on Sunday told his fellow Republicans that “there is a path” to cut U.S. spending and raise the debt ceiling, but it will require his party to accept sacrifices, according to two sources who heard his message.
    On a conference call, Boehner said he does not think it is possible to negotiate a large spending-cut deal directly with the White House, the sources said.
    He told Republicans he is drafting legislation that reflects the principles of a strict spending-cut bill that failed in the Democratic-controlled Senate last week, the sources said. – Reuters, 7-24-11
  • Reid Working on Backup Plan to Lift Ceiling, Cut Spending: Senate Democratic Majority Leader Harry Reid is working on a backup plan to increase the debt ceiling by $2.5 trillion and cut spending by the same amount in the event there is no further progress in talks between Democratic and Republican congressional leaders, a Senate Democratic aide said Sunday.
    The plan would have no new tax increases, the aide said. The $2.5 trillion increase in the debt limit would be enough to support federal spending through 2012, avoiding the need to revisit the issue next year.
    The Senate Democratic leader could brief some members of his caucus on the plan later Sunday evening, the aide said. More details of what would constitute the spending reductions would not be available until after that briefing occurred…. – WSJ, 7-24-11
  • John Boehner, GOP prepared to ‘move on their own’ to unveil debt ceiling plan Sunday: House Speaker John Boehner said Sunday he’s prepared to go it alone and unveil a plan to raise the nation’s debt ceiling timed to calm the opening of the Asian markets.
    “I would prefer to have a bipartisan approach to solve this problem. If that’s not possible, I and my Republican colleagues in the House are prepared to move on their own…today,” Boehner told Fox News Sunday.
    The move comes amid a weekend of emergency meetings on Capitol Hill as lawmakers try to cut a path out of deadlock to calm investors before the Asian markets open later this afternoon.
    Boehner’s latest proposal is a two-phase plan that would raise the debt ceiling about $1 trillion through 2011 and be offset by an equal amount of savings.
    A second debt boost would be pegged to upwards of $3 trillion more in savings in 2012, with a bipartisan committee charged with coming up with a mix of spending cuts, revamped programs and tax overhauls. Such a plan – which would mean another debt debate in the middle of the 2012 election season – was a non-starter with Democrats and the administration…. – NY Daily News, 7-24-11
  • Developments in U.S. debt talks: U.S. House of Representatives Speaker John Boehner tells Fox News Sunday that House Republicans are prepared to push through their own deficit reduction package if congressional leaders fail to produce a bipartisan plan by Sunday afternoon. That would be just hours before financial markets open in Asia. With time running out, the Democratic-led Senate might have no choice but to accept what the Republican-led House passes this week.
    White House Chief of Staff Bill Daley tells NBC’s “Meet the Press” that any short-term deal to raise the debt limit would harm the economy because financial markets and business leaders would not have the certainty they need to make investment decisions. Democrats want a debt limit extension through the 2012 presidential election year…. – Reuters, 7-24-11
  • Boehner Writes a House Plan in Case Debt Deal Stalls: Speaker John A. Boehner said Sunday that the House would prepare its own deficit reduction package if Congress and the White House failed to agree on a bipartisan plan by Sunday afternoon, as lawmakers forged ahead in an increasingly grim standoff over whether to raise the nation’s debt ceiling.
    Leaders of both parties continued to negotiate over the telephone, racing toward the opening of the Asian markets, which happens later on Sunday. That opening is widely feared to be the first real test of tangible financial market fallout from the impasse over the debt limit. It was far from clear that such a deal would or could be reached by that hour…. – NYT, 7-24-11
  • Boehner asks GOP lawmakers to embrace new plan: House Speaker John Boehner implored fellow House Republicans Sunday to get behind a measure to resolve the debt crisis that can pass both the House and Senate.
    In a conference call, Boehner told the House Republicans that some of them will have to make sacrifices as part of the deal. A person familiar with Boehner’s remarks said the speaker told lawmakers that both the House and Senate are ready to embrace significant spending reductions.
    Boehner, however, said he does not believe President Barack Obama will ever embrace a big package that does not include tax increases…. – AP, 7-24-11
  • US Republicans may present a proposal to Obama tonight: US Republicans may present a proposal to Obama tonight The impasse on Capitol Hill over how to reduce the United States´ budget deficit continues this weekend. Although it would seem that some progress has been made there is still, at least, and in the best of cases, some posturing coming from both sides and, at worst, the risk of miscalculations on either part.
    Thus, the House speaker, John Boehner, has told Republican lawmakers in a conference call that they need to provide a positive signal on a plan to avert default before Asian markets open, Republican congressional aides have said, according to Bloomberg News…. – Share Cast, 7-24-11
  • As deadline looms, Congress scrambles for debt limit deal: Despite ongoing efforts by congressional leaders to hammer out a deal on Sunday for raising the debt ceiling, all indications suggest that the two parties remain far apart on a viable bipartisan agreement just hours before the opening of the Asian financial markets.
    House Speaker John Boehner, who abandoned debt negotiations with the president on Friday, says he is working on the framework for a new deficit reduction proposal, which he hopes to unveil on Sunday. But his proposal is expected to include a two-part plan, with two debt limit increases – and Democrats have repeatedly vowed to fight a short-term package.
    Nevertheless, Boehner pledged on Sunday to move forward with a his proposal regardless of Democratic opposition. “The preferable path would be a bipartisan plan that involves all the leaders, but it is too early to decide whether that’s possible,” he said in an appearance on “Fox News Sunday.” “If that’s not possible, I and my Republican colleagues in the House are prepared to move on our own.”
    Boehner’s $3-4 trillion proposal is expected to include a short-term increase in the debt limit paired with cuts of equal or greater size, along with an agreement to increase the limit again later on – on that occasion paired with spending reforms. Entitlements and mandatory spending would be targeted for reforms and savings, which would be identified either by a commission or by congressional committees…. – BS News, 7-24-11
  • Geithner Calls Two-Stage Rise of Debt Ceiling ‘Nonstarter’: U.S. Treasury Secretary Timothy Geithner said the latest “two-stage” proposal being considered by Republicans to lift the federal debt ceiling is a non-starter because it can’t garner enough Democratic support to pass Congress.
    Mr. Geithner, speaking on CNN’s “State of the Union,” said the GOP idea would be just a short-term solution to the current budget impasse and that President Barack Obama’s “preference, still” is to reach a bigger agreement to reduce the budget deficit and raise the government’s $14.29 trillion borrowing limit through 2012.
    The president is still in talks with House Speaker John Boehner (R., Ohio) over how to lift the debt cap in time to avoid a government default, Mr. Geithner said.
    The latest Republican proposal would raise the debt limit in two phases, with a smaller increase of about $1 trillion immediately, which would carry the government through the end of this year, matched by a similar amount of spending cuts. The second increase would depend on a deficit-reduction commission’s recommendations.
    The commission would recommend a set of changes to safety-net programs and a tax overhaul in hopes of closing the deficit by as much as another $3 trillion. Once that package was adopted, the debt ceiling would be raised again in January 2012…. – WSJ, 7-24-11
  • The 14th Amendment, the Debt Ceiling and a Way Out: A few days ago, former President Bill Clinton identified a constitutional escape hatch should President Obama and Congress fail to come to terms on a deficit reduction plan before the government hits its borrowing ceiling. He pointed to an obscure provision in the 14th Amendment, saying he would unilaterally invoke it “without hesitation” to raise the debt ceiling “and force the courts to stop me.”
    On Friday, Mr. Obama rejected the idea, though not in categorical terms. “I have talked to my lawyers,” Mr. Obama said. “They are not persuaded that that is a winning argument.”
    Another element of uncertainty and possible court battles do not seem to appeal to the White House, and it is, in any event, not clear that the nation’s creditors would continue to lend it money were the president to take unilateral action. The provision in question, Section 4 of the amendment, was meant to ensure the payment of Union debts after the Civil War and to disavow Confederate ones. But it was written in broader terms.
    “The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion,” the critical sentence says, “shall not be questioned.”
    The Supreme Court has said in passing that those words have outlived the historical moment that gave rise to them….. – NYT, 7-24-11
  • US House Speaker Boehner: last offer still on table: “The preferable path would be a bipartisan plan that involves all the leaders, but it is too early to decide whether that’s possible,” Boehner said on Fox News Sunday. “If that’s not possible, I and my Republican colleagues in the House are prepared to move on our own…. There is going to be a two-stage process. It is not physically possible to do all of this in one step.”
    Boehner said his offer that included some $800 billion in new tax revenue and massive spending cuts was never withdrawn. That plan was dubbed the “grand bargain” despite his decision to walk away from negotiations with Obama last week.
    “I don’t know, it may be pretty hard to put Humpty Dumpty back together again. My last offer is still out there. I’ve never taken my last offer off the table,” Boehner said, noting that the White House never has agreed to it. At the moment, however, Boehner said that the better path was working with his congressional colleagues “to put together a process” that is do-able…. – Reuters, 7-24-11
  • Democrats cool to Boehner’s two-step debt-ceiling plan: House Speaker John Boehner said he is still trying to unveil a bipartisan debt limit deal this afternoon, but acknowledged he doesn’t have Democrats onboard with a two-step proposal he has offered. “We’re not there yet,” the Republican said in a morning interview on “Fox News Sunday.”
    Boehner and Democrats in Congress are stuck on the structure of the deficit reduction plan needed to persuade rank-and-file Republicans to raise the debt limit.
    If the limit isn’t raised by Aug. 2 the government will not be able to pay its bills. Boehner said Saturday that he wanted to announce a breakthrough in talks before the financial markets opened in Asia on Sunday.
    As talks with congressional Democrats appeared stalled, both Boehner and Treasury Secretary Timothy Geithner appeared to open the door to resuming direct discussions with the WH. The speaker pulled out those talks on Friday. Asked if that so-called “grand bargain” was dead, Boehner said, “It may be pretty hard to put Humpty Dumpty back together again,” he said. “My last offer is still out there.”
    The comments came as congressional Democrats appear to have drawn a hard line against two-step process Republicans are pushing…. – LAT, 7-24-11
  • Obama, lawmakers scramble to salvage US debt deal:

    Congress drafting legislation, wants plan by Monday
    Treasury out of money on Aug. 2; AAA rating at risk
    Default would raise interest rates, hit global growth
    Congress aims to show progress before Asian markets open

    Scolded by President Barack Obama, Congress scrambled on Saturday to produce a deficit plan within 48 hours that keeps the United States from a catastrophic debt default now days away.
    A day after talks collapsed in acrimony, Obama held an emergency meeting with congressional leaders at the White House and told them to find areas of agreement.
    Their goal: Seal a deficit-reduction package of spending cuts and perhaps tax increases that will allow a vote by the Aug. 2 deadline to raise the U.S. debt ceiling beyond $14.3 trillion and avoid economic calamity.
    A Republican leadership aide said lawmakers are working on a plan for $3 trillion to $4 trillion in savings over 10 years, but another high-ranking Republican official said no numbers had been settled. Republican leaders want “to show progress” by 4 p.m. EDT (2000 GMT) on Sunday, the aide said…. – Reuters, 7-24-11

  • Republicans Weigh Short-Term Debt Deal, Risking Obama Veto: Republicans prepared to force action on a shorter-term extension of the U.S. debt limit than President Barack Obama has requested, defying a veto threat amid warnings that continued stalemate risks roiling financial markets as soon as tonight.
    The president would veto a measure to raise the debt ceiling if it doesn’t extend the limit into 2013, White House Chief of Staff Bill Daley said in an interview on NBC’s “Meet the Press.” Daley warned that “markets around the world” would react negatively to a short-term measure offering less than $2.4 trillion in borrowing authority. “We’ve got to get past this debt-ceiling vote,” Daley said. “It’s time to get some certainty.”
    House Speaker John Boehner, an Ohio Republican, said while he’d prefer a compromise package, his party was “prepared to move on our own” if that proved impossible. He aims to announce a framework — bipartisan or not — later today to try to minimize uncertainty before Asian markets open, he said on Fox News. Boehner scheduled a 4:30 p.m. conference call with Republicans…. – Bloomberg, 7-24-11
  • Boehner tells GOP he will unveil new debt strategy: Congressional leaders raced Saturday to develop a new strategy for raising the federal debt limit that House Speaker John A. Boehner told his troops would include an ambitious plan to reduce future borrowing by as much as $4 trillion.
    Although his talks with President Obama over a “grand bargain” to restrain the national debt collapsed in acrimony Friday, Boehner (Ohio) said he is confident lawmakers will avert a historic U.S. default — a possibility just 10 days off.
    “Over this weekend, Congress will forge a responsible path forward,” Boehner said in a statement.
    The speaker and other leaders started their day at the White House, where Treasury Secretary Timothy F. Geithner warned of possible trouble in the markets if policymakers don’t announce a viable plan for raising the debt limit before Asian exchanges open Sunday evening, according to people familiar with the meeting. Aides said Geithner’s warning lent fresh urgency to the negotiations, which continued throughout the day on Capitol Hill.
    By early evening, the outlines of a two-stage strategy were emerging. First, lawmakers would vote on a package to cut agency spending by as much as $1 trillion over the next decade and raise the debt limit, currently set at $14.3 trillion, by the same amount. That would give Geithner enough borrowing authority to cover the nation’s bills through the end of this year…. – WaPo, 7-23-11

JULY 23, 2011: OBAMA MEETS WITH CONGRESSIONAL LEADERS AT THE WHITE HOUSE — NO DEAL IN SIGHT

Boehner tells GOP he plans to unveil new debt strategy within 24 hours: House Speaker John A. Boehner (R-Ohio) told his troops Saturday that he hopes to roll out a two-step strategy within the next 24 hours for raising the federal debt limit and restraining the national debt to avoid roiling Asian financial markets when they open Sunday, according to a participant in the conference call.
In the call with his House GOP colleagues, Boehner said he still hopes to slice as much as $4 trillion out of the federal budget over the next decade, despite the collapse of talks with President Obama on Friday over a bipartisan “grand bargain” to reduce the government’s spiraling debt…. –

  • President Barack Obama’s Weekly Address: A Bipartisan Approach to Strengthening the EconomyWH, 7-23-11
  • Rep. Jeb Hensarling (R-TX) Delivers the Weekly Republican Address (VIDEO)GOP, 7-23-11“I’ve been left at the altar now a couple of times. And I think that one of the questions that the Republican Party is going to have to ask itself is, Can they say yes to anything?” — President Barack Obama“The President wanted to know that there was a plan for preventing national default. The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending.” — Senate Republican Leader Mitch McConnell“Congress should refrain from playing reckless political games with our economy. Instead, it should be responsible and do its job, avoiding default and cutting the deficit.” — White House Press Secretary Jay Carney

    “This debate boils down to a simple choice. We can come together for the good of the country and reach a compromise or we can issue insults and demands and ultimatums at each other, withdraw to partisan corners, and achieve nothing. We know the right thing to do, and we know what the American people expect us to do.” — President Barack Obama in the July 23, 2011 Weekly Address

    “Our government has gotten so big, so expensive, it’s keeping our economy from recovering as it should. If we’re going to avoid any type of default and downgrade, if we’re going to resume job creation in America, the president and his allies need to listen to the people and work with Republicans to cut up the credit cards once and for all.” — House GOP Conference Chair Jeb Hensarling

    Obama/Boehner Talk Kicks Off With Light Banter: “I think everybody agrees it’s too hot to play golf today,” Obama told Boehner….
    Boehner responded to the president saying, “Yeah, I took a walk there this morning.” — ABC News, 7-23-11

    Giuliani: Obama Is Afraid to Lead on Budget: “If we default, 90 percent of the responsibility is on the president of the United States,” Giuliani told Sean Hannity on Fox News after a visit to New Hampshire that fueled speculation the he would seek the GOP nomination for president. “He is yet to outline a plan because he’s too darn afraid that he’s going to have to pay political [consequences]. And he’s pretending he wants to do all these big cuts; we know he doesn’t want to do cuts . . . He wants to do the minimum number of cuts and the maximum tax increases.”
    “I don’t want to do this just to run, I want to do it only because I have the best chance of winning,” he said. “And if I think someone else has a better chance of winning, I don’t want to spoil their chances.”
    “My objective is we cannot have President Obama after the next year,” he said. “I mean, look at what he’s put us through with this whole debt thing, and this because a president doesn’t lead. I mean, Republicans, Democrats fight with each other in the House, and the president has never outlined how he would do it . . . This is outrageous!”… – Newsmax, 7-23-11

  • Obama and congressional leaders hold grim Saturday meeting on debt crisis: President Obama convened an unusual Saturday meeting with Congressional leaders on the looming government default. The session lasted less than an hour, and the atmospherics appeared grim…. – CS Monitor, 7-23-11
  • Debt crisis: Deal sought to head off stock plunge: Precariously short of time, congressional leaders struggled in urgent, weekend-long talks to avert an unprecedented government default, desperate to show enough progress to head off a plunge in stock prices when Asian markets open ahead of the U.S. workweek.
    President Barack Obama met Saturday with Republican and Democratic leaders — but only briefly— the day after House Speaker John Boehner abruptly broke off his own once-promising compromise talks with the White House. Staff members kept up detailed efforts.
    The goal now is to produce at least a framework agreement to raise the nation’s debt limit by Monday, congressional officials said. Even that would allow scarcely enough time for the House and Senate to clear legislation in time for Obama’s signature by the Aug. 2 deadline, a week from Tuesday.
    House Speaker John Boehner told rank-and-file Republicans in a conference call after Saturday’s meeting that he hoped to be able to announce a “viable framework for progress” by 4 p.m. EDT on Sunday, before the stock markets open in Japan and elsewhere in Asia, according to two participants.
    Lawmakers fear a big drop in investor confidence in U.S. stocks and bonds could start in Asia and sweep toward Europe and the Americas, causing U.S. stock values to plunge on Monday…. – AP, 7-23-11
  • Congress Looks For New Debt Deal To Prevent Monday Panic: Lawmakers and President Barack Obama met at the White House Saturday, once again looking to renew talks to raise the debt limit and lower the deficit after a highly public breakdown.
    The tense scene in the Cabinet Room was described by the pool reporter as “a school principal’s office with a handful of sullen suspects sitting grimly downcast as the boss says: ‘OK, we’re going to sit here all day until I find out who shot that spitball.'”
    But a marathon session to iron out a deal before the end of the weekend it wasn’t — lasting just 50 minutes — and all signs point to a continued stalemate after Friday’s surprising events.
    An agreement that seemed within reach to Obama on Thursday was left on the table Friday by Speaker of the House John Boehner, spurring hours of recriminations over who killed the deal.
    In an hastily called press conference, Obama angrily claimed he had been “left at the altar” by Boehner for the second time in as many weeks. Boehner responded, accusing Obama of demanding new taxes at the last minute and saying “the White House moved the goalposts.”
    Both leaders made themselves vulnerable in the negotiations — Obama accepting cuts to entitlements that already were inflaming his base, and Boehner agreeing to $800 billion in revenue increases — and moved quickly to blame the other for failing to agree to a historic deficit reduction package.
    Obama appeared to be holding out hope Friday night that his deal with Boehner could be resurrected in some form, with an administration official saying “this offer is still available.”
    But according to congressional aides, Boehner insists negotiations resume anew in Congress on a plan with spending cuts and few, if any, revenue increases — and without Obama. Additionally, they are drafting the so-called “last ditch” plan put forth by Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid to allow Obama to unilaterally raise the debt limit, to be taken up if all else fails….. – Business Insider, 7-23-11
  • Debt crisis and market worries: Quick deficit-deal framework sought to head off stock sell-off: Precariously short of time, congressional leaders struggled in urgent, weekend-long talks to avert an unprecedented government default, desperate to show enough progress to head off a plunge in stock prices when Asian markets open ahead of the U.S. workweek. With the White House consigned to the periphery of negotiations, Republicans sought as much as $4 trillion in deficit cuts over a decade as a condition for raising the nation’s debt limit.
    But after hours of staff negotiations followed by a meeting of Congress’ top four leaders, Senate Majority Leader Harry Reid accused GOP leaders of intransigence, adding he would not accept anything less than a deal that raised the debt limit through 2012. “Their unwillingness to compromise is pushing us to the brink of a default on the full faith and credit of the United States. We have run out of time for politics. Now is the time for cooperation,” he said in a sharply worded statement.
    A spokesman for House Speaker John Boehner, Michael Steel, responded mildly. “Like the President and the entire bipartisan, bicameral Congressional leadership, we continue to believe that defaulting on the full faith and credit of the United States is not an option,” he said in a written statement.
    Obama met earlier in the day with the Republican and Democratic leaders — but only briefly— the day after Boehner abruptly broke off his own once-promising compromise talks with the White House…. – WaPo, 7-23-11
  • White House says Obama wants long-term debt solution to protect US economy: The White House says President Barack Obama won’t accept a short-term extension of the nation’s debt limit because it would do more harm than good.
    Obama met with congressional leaders at the White House on Saturday for about an hour. In a written statement afterward, his spokesman said a temporary extension could hurt the U.S. credit rating and force Americans to pay higher interest rates on credit cards and other consumer debt. The White House said Congress shouldn’t be playing “reckless political games” with the economy.
    Obama wants a debt-ceiling extension that will last through the end of 2012. Republicans have talked of a shorter extension…. – AP, 7-23-11
  • Obama, congressional leaders gather at White House to try to save debt deal: Ahead of the Saturday talks, a House GOP aide signaled that the speaker’s most likely position would be to push for a shorter-term deal. Both sides have identified more than $1 trillion in cuts, and Boehner’s camp suggested that some of those reductions could be used to meet the Republican demand of lifting the debt ceiling by cutting more than the dollar value of that increase in borrowing authority.
    The president has repeatedly objected to any short-term deal, calling it “kicking the can down the road,” because there is a likelihood that the two sides would reach the same gridlock next year once such an extension was set to expire, and he did so again on Friday. But on Saturday morning, the GOP aide said Obama was just trying to avoid dealing with the issue next year, when he will face reelection.
    “Now, we do not know what size or shape a final package will take, but it would be terribly unfortunate if the president was willing to veto a debt-limit increase simply because its timing would not be ideal for his reelection campaign. “We want the most significant deficit-reduction possible, but linking the full faith and credit of the United States to presidential campaign politics is not a defensible position,” the aide added, speaking on the condition of anonymity to discuss Boehner’s strategy…. – WaPo, 7-23-11
  • Fight over raising the debt ceiling almost sure to lead to bad policy: It’s quite likely that any deal reached by lawmakers to stave off default is going to involve compromises that were unthinkable even a few short weeks ago…. – LAT, 7-23-11
  • Obama Calls For Leaders To Work Together On Debt ‘Neither Party Is Blameless,’ President Says: President Barack Obama called on Democratic and Republican leaders to come together and do “the right thing” to resolve the nation’s debt crisis Saturday in his weekly address.
    He warned that unless an agreement is reached to raise the amount of money the federal government is allowed to borrow, debt will “weaken our economy, cause higher interest rates for families, and force us to scale back things like education and Medicare.”
    The president summoned congressional leaders to the White House Saturday after House Speaker John Boehner announced Friday night he was pulling out of the debt-ceiling negotiations with the Obama administration.
    “Neither party is blameless,” Obama said of the nation’s debt. “Both parties have a responsibility to do something about it.” Envisioning a way forward, the president said, “We need to put aside our differences to do what’s right for the country. Everyone is going to have to be willing to compromise. Otherwise, we’ll never get anything done.” Obama advocated a “balanced approach” to cutting the deficit that “goes after waste” and “makes some serious cuts to worthy programs” that wouldn’t be made “under normal circumstances.”… – CNN, 7-23-11
  • Obama’s Weekly Address: There’s Still Time to Compromise on the Deficit: In a message that may be too little too late, President Obama used his weekly address to issue an urgent plea to Congress to compromise on a deal to raise the debt ceiling and reduce the deficit.
    The morning after a deal to reduce the deficit broke down, Obama outlined his case for “a balanced approach to cutting the deficit” through spending cuts and revenue increases.
    “We need an approach that goes after waste in the budget and gets rid of pet projects that cost billions of dollars,” Obama said. “We need an approach that makes some serious cuts to worthy programs – cuts I wouldn’t make under normal circumstances. And we need an approach that asks everybody to do their part.”
    “There will be plenty of haggling over the details in the days ahead. But this debate boils down to a simple choice,” he said. “We can come together for the good of the country and reach a compromise; we can strengthen our economy and leave for our children a more secure future.
    “Or we can issue insults and demands and ultimatums at each another, withdraw to our partisan corners, and achieve nothing,” he said. “Well, we know the right thing to do. And we know what the American people expect us to do.”… – ABC News, 7-23-11
  • Debt Ceiling Talks Collapse as Boehner Walks Out: ….Republicans, though, said that the White House pushed for more revenue midway through the talks. “The White House moved the goal posts,” Mr. Boehner said in a news conference.
    In his weekly radio address on Saturday, Mr. Obama continued to press the idea that it was “not right to ask middle class families to pay more for college before we ask the biggest corporations to pay their fair share of taxes.” “This debate boils down to a simple choice,” the president said. We can come together for the good of the country and reach a compromise; we can strengthen our economy and leave for our children a more secure future. Or we can issue insults and demands and ultimatums at each another, withdraw to our partisan corners, and achieve nothing.”
    Representative Jeb Hensarling, Republican of Texas, pressed the idea that the deficit and government spending need to come down to help create jobs and bolster the economy. “If we’re going to avoid any type of default and downgrade — if we’re going to resume job creation in America _ the president and his allies need to listen to the people and work with Republicans to cut up the credit cards once and for all,” Mr. Hensarling said.
    This time, however, Mr. Obama had also faced a firestorm from within his party, because of the spending cuts he was considering with Mr. Boehner. NYT, 7-23-11
  • What Obama said in his 30-minute primal scream at the GOP: President Obama, clearly angry, let loose on House Republicans in what was, for him, an extraordinary fit of pique Friday night after talks with Speaker John Boehner broke down…. – CS Monitor, 7-23-11
  • Failure to reach a ‘grand bargain’ on debt makes 2012 harder for Obama: Sometime this spring, President Barack Obama shifted course on the budget and started pursuing a “Big Deal” to dramatically curb runaway deficits. On Friday chances for that deal disappeared, and with it perhaps his last chance to fundamentally change the course of the 2012 elections.
    Even a multitrillion-dollar package of spending cuts and tax increases would not have stopped the red ink. At best, the grand bargain being sought would have shaved about $4 trillion from deficits expected to total at least $8 trillion over the next 10 years. But it could have changed the storyline of the nation’s politics, if not its government. Obama would have been able to run for a second term claiming bipartisan success at fiscal restraint, a boast he hoped would help erase or at least blur the image of him as a tax-and-spend liberal.
    Instead, the apparent failure of Obama and congressional leaders to reach a big deal likely means the stage is largely set for the pivotal 2012 elections. The two major parties are unable to agree on how much government people want and who should pay for it. Voters – who went for Obama and the Democrats in 2008 and for the Republicans in 2010 – will have to decide between two rival visions of government.
    For Obama, who as the incumbent will be the centerpiece of the campaign, the big deal was something he came to cherish after first ignoring it…. – McClatchy Newspapers, 7-23-11
  • Deficit negotiations: Myths and realities: For the better part of 2011, President Barack Obama and House Speaker John Boehner (R-Ohio) have been talking hypothetically — each from his own ideological perspective — about the potential fallout of their inability to reach a debt ceiling, deficit-cutting plan. The implications of their inability to get some deal done are about to become terrifyingly concrete — in the form of Monday’s skittish market opening and a potentially costly credit downgrade that will hike the price of everything from government borrowing to home mortgages. But that hasn’t stopped the spinning and posturing as each side seeks the most advantageous deal possible while selling the American public on the argument that it’s the other guy who is pushing the country over the abyss.
    With that in mind, here’s a guide to the reality behind the spin in the debt ceiling battle:
    Myth: Obama wins politically, no matter what happens…. Reality: That may have been true a week ago, but it’s less of a sure thing now.
    Myth: The talks collapsed over Obama’s demand for $400 billion more in revenue over 10 years…. Reality: Boehner didn’t have the votes.
    Myth: Obama could sell his end of the bargain to Democrats…. Reality: He probably could have.
    Myth: The GOP owns the deficit-reduction debate…. Reality: Bye-bye high ground.
    Myth: There are three branches of government…. Reality: Grover Norquist seems to have opened a fourth. And he says the McConnell-Reid compromise is the way to go, so don’t bet against everybody’s least favorite fallback. – Politico, 7-23-11
  • What’s Happened to Obama?: Scarcely a week goes by without one of the big three liberal economists — Paul Krugman, Robert Reich, and Joseph Stiglitz — lambasting the president. Recently New York Times columnist Krugman lamented that Obama’s campaign slogan “Yes, we can” had become “No, we won’t.”…
    What happened? Frank Rich complains about Obama’s “passivity.” Others grumble the supposedly great communicator has failed to control the political narrative — as is currently the case where the discussion in Washington centers on the Republican theme, “reduce the deficit,” when it should be on “increase the number of good jobs.” Writing in the New York Review, Yale Professor David Bromwich observed, “Obama has always preferred the symbolic authority of the grand utterance to the actual authority of a directed policy… protracted moods of extreme abstraction seem to alternate with spasmodic engagement.”
    Not surprisingly, there’s recently been a spate of articles “psychoanalyzing” the president. Writing in the New Yorker, George Packer observed that Obama “takes responsibility as an end in itself.” In his blog, Packer explained, “there something in Obama’s character that needs to be seen as reasonable — as the one grown-up — in the room — and that is deeper than any partisan policy views he might hold.”…. – Huff Post, 7-23-11

JULY 22, 2011: DEBT TALKS BREAK DOWN, BOEHNER WALKS AWAY FROM OBAMA AND WHITE HOUSE NEGOTIATIONS

Boehner blames Obama for collapse of debt talks: House Speaker John Boehner said the White House “moved the goal posts” by demanding an additional $400 billion in revenue during talks over a deal to avoid default. He said he was confident the U.S. will not default but said the White House has “refused to get serious” about spending cuts. “Dealing with the White House is like dealing with a bowl of Jell-O,” Boehner said.

Obama says Boehner “walked away” from debt talks: President Obama said House Speaker John A. Boehner broke off talks over crafting a “big deal” that would avert a federal default. He called the deal the White House was offering “extraordinarily fair” and said that “if it was unbalanced it was unbalanced in the direction of not enough revenue.”
The president said he was summoning congressional leaders to the White House Saturday morning at 11 a.m. “We have run out of time and they are going to have to explain to me how it is that we are going to avoid default,” he said.

Talks in the effort to avert a government default have collapsed, GOP aides say: Negotiations between the White House and House Speaker John Boehner over an agreement to cut spending, overhaul the tax code and avert a government default have broken down, according to senior House Republican aides. Boehner planned to notify his caucus Friday night.

“In the end, we couldn’t connect. Not because of different personalities, but because of different visions for our country.” — House Speaker John Boehner

“This was an extraordinarily fair deal. If it was unbalanced, it was unbalanced in the direction of not enough revenue. It is hard to understand why Speaker Boehner would walk away from this kind of deal.” — President Barack Obama

McConnell Statement on Debt Talks: U.S. Senate Republican Leader Mitch McConnell made the following statement Friday regarding the announcement that Speaker Boehner will work with the Senate Leadership on deficit reduction legislation:
“It’s disappointing that the talks with the White House did not reach a favorable conclusion, and I appreciate the Speaker insisting on reduced spending and opposing the President’s call for higher taxes on American families and job creators. It is similarly disappointing that the White House has refused to join Republicans in our effort to cut Washington spending now, cap runaway spending in the future and save our entitlement programs and our country from bankruptcy by requiring the nation to balance its budget. Speaker Boehner has informed us that he will work on a new path forward with Leader Reid to develop a solution that will prevent default, without job killing tax hikes, while substantially reducing Washington spending.
“As I’ve said before, 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.”

  • Boehner confident government won’t default: Speaking Friday evening after withdrawing from talks on a “grand bargain” for $4 trillion or so in deficit cuts over the coming decade, Boehner said Congress will have to step in to forge an agreement to lift the government’s borrowing cap.
    “We can work together here on Capitol Hill to forge an agreement and I’m hopeful the president will work with us,” Boehner said.
    Boehner accused Obama of “moving the goal posts” by demanding $400 billion in tax increases on top of about $800 billion in revenues that would have been reaped through a comprehensive rewrite of the tax code.
    “There was an agreement with the White House at $800 billion in revenue. It’s the president who walked away from his agreement and demanded more money at the last minute,” Boehner said. “And the only way to get that extra revenue was to raise taxes.” AP, 7-22-11
  • Debt talks break down; “We have run out of time”: “We have run out of time,” Mr. Obama said in acknowledging the breakdown.
    “It is hard to understand why Speaker Boehner would walk away from this kind of deal and frankly, if you look at the commentary out there, there are a lot of Republicans that are puzzled as to why it couldn’t get done,” he said. “In fact, there are a lot of Republican voters out there who are puzzled as to why it couldn’t get done.”
    Mr. Obama at one point suggested he “couldn’t get a phone call returned” from Boehner earlier in the day, and said that when it comes to a deal, “I’ve been left at the altar now a couple of times.” He said he was unable to guarantee that Social Security checks and other obligations would go out after the August 2 deadline, and said the blame falls on House Republicans who have been unwilling to compromise to get a deal done.
    Mr. Obama said he was calling Congressional leaders to the White House Saturday morning at 11:00 “to explain to me how we are going to avoid default,” acknowledging that discussions were basically back to square one.
    “What this came down to is there doesn’t seem to be a capacity for them to say yes,” Mr. Obama said.
    “I think the challenge really has to do with the seeming inability, particularly in the House of Representatives, to arrive at any kind of position that compromises any of their ideological preferences,” he said. “None. And you’ve heard it. I’m not making this up. I think there are a number of members of that caucus that have been very clear about that.”
    Asked what he would say to calm skittish markets, Mr. Obama said, “I remain confident that we will get an extension of the debt limit and we will not default,” but he was less confident that the GOP will step up and deal with underlying debt and deficits “in a way that is fair.” He said he would be willing to sign a debt limit increase that did not include deficit reduction measures if presented such a bill by Congress.
    The president acknowledged that the Democratic leadership in Congress had not signed off on the proposed deal. He said, however, that both he and the leadership “were willing to engage in serious negotiations despite a lot of heat from a lot of interest groups around the country in order to make sure that we actually dealt with this problem.”
    The proposed cuts to entitlements had angered many Democrats and interest groups, and in announcing that he had offered $650 million in cuts on that front over ten years, Mr. Obama said, “We believed that it was possible to shape those in a way that preserved the integrity of the system, made them available for the next generation and did not affect current beneficiaries in an adverse way.”
    “I was willing to try to persuade Democratic leadership as well as Democratic members of Congress that even a deal that is not as balanced as I think it should be, is better than no deal at all,” he said. “And I was willing to persuade Democrats that getting a handle on debt and deficit reduction is important to Democrats just as much as it’s important to Republicans. And frankly a lot of Democrats were persuaded by that.”… – CBS News, 7-22-11
  • Boehner abruptly withdraws from talks with Obama: House Speaker John Boehner abruptly broke off talks with President Barack Obama Friday night on a deal to cut federal spending and avert a threatened government default, sending compromise efforts into an instant crisis.
    Within minutes, an obviously peeved Obama virtually ordered congressional leaders to the White House for a Saturday meeting on raising the nation’s debt limit. “We’ve got to get it done. It is not an option not to do it,” he declared.
    For the first time since negotiations began, he declined to offer assurances, when asked, that default would be avoided. Moments later, however, he said he was confident of that outcome.
    At a news conference of his own a short while later, Boehner said, “I want to be entirely clear. No one wants default.”
    In a letter circulated earlier 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 the president wanted to raise taxes, and was reluctant to agree to cuts in benefit programs…. – AP, 7-22-11
  • Debt Ceiling Talks Collapse as Boehner Walks Out: An angry and frustrated President Obama accused Republican leaders on Friday night of walking away from “an extraordinarily fair deal” to raise the nation’s debt limit.
    In a hastily called news conference at the White house, a grim-faced Mr. Obama demanded that congressional leaders appear at the White House on Saturday.
    “I want them here at 11 a.m. tomorrow,” Mr. Obama told reporters. “They are going to have to explain to me how it is that we are going to avoid default.”
    The president spoke moments after House Speaker John A. Boehner, the Republican from Ohio, released a letter that he had sent to House colleagues, saying he was breaking off the budget negotiations because of differences over revenues and would instead try to strike an agreement with Senate leaders to raise the debt limit by Aug 2 and avoid sending the government into a potential default.
    “In the end, we couldn’t connect,” Mr. Boehner said. “Not because of different personalities, but because of different visions for our country.”
    In his comments, Mr. Obama described a deal of spending cuts that he said was more generous than what the so-called Gang of Six had offered and said it was “hard to understand” why Mr. Boehner would walk away…. – NYT, 7-22-11
  • Boehner calls off debt talks with Obama: House Speaker John Boehner told President Obama tonight he is pulling out of debt negotiations to work directly with the Senate about a fall-back plan to lift the nation’s $14.3 trillion debt ceiling by the Aug. 2 deadline.
    In response, Obama said he is summoning House and Senate leaders to the White House Saturday morning “to explain to me how we are going to avoid default.” “We are running out of time,” Obama said.
    The Treasury Department has said that if the debt ceiling is not lifted by Aug. 2 — a week from Tuesday — it will lose borrowing authority to pay the government’s bills and face default…. – USA Today, 7-22-11
  • Obama scolds GOP as debt talks break down: ‘Where’s the leadership?’: In an unusual display of emotion, President Obama angrily responded to House Speaker John A. Boehner’s abrupt withdrawal from talks on a debt ceiling increase, and summoned congressional leaders to the White House on Saturday for emergency talks to plot a new course before the Aug. 2 deadline.
    “We have run out of time,” the president said in a hastily-called news briefing, just moments after Boehner informed him of his decision.
    On Thursday, Obama and Boehner appeared to be closing in on a deal that would have raised the debt ceiling through 2013, combined with spending cuts and entitlement reforms to achieve $3 trillion in deficit reduction.
    But talks apparently broke down in a dispute over taxes. Obama, prodded by Democrats, insisted that any deal include new revenues in addition to spending cuts…. – LAT, 7-22-11
  • Boehner Pulls Out of Debt Talks: House Speaker John Boehner (R., Ohio) has decided to no longer pursue a major deficit-reduction deal with the White House and informed President Barack Obama of his decision Friday night, House Republican leadership aides said late Friday.
    “In the end we couldn’t connect. Not because of different personalities, but because of different visions for our country,” Mr. Boehner wrote in a letter to his colleagues. “I have decided to end discussions with the White House and begin conversations with the Senate in an effort to find a path forward.”
    The speaker’s office reached out to Senate leaders Friday to begin to figure out what the path forward is, Republican officials said. House and Senate negotiators will hold talks through the weekend to try to determine what kind of agreement they could reach to raise the government’s debt ceiling by Aug. 2 and prevent a government default.
    Senior Republican aides said they didn’t know what shape a deal would ultimately take, but they said they needed to present House members with an agreement by Monday to have time to pass legislation in both chambers by Aug. 2.
    “We know we have a short window of time here,” a senior Republican aide said.
    After a series of discussions between administration officials and the House leadership, it became clear, the GOP aides said, that the White House and Congress’s interests were not aligned…. – WSJ, 7-22-11
  • John Boehner walks away from debt talks: House Speaker John Boehner has walked away from negotiations with President Obama over a deal to raise the debt limit.
    “In the end, we couldn’t connect. Not because of different personalities, but because of different visions for our country,” Boehner said in a letter to colleagues. He said Mr. Obama ” is emphatic that taxes have to be raised” and “adamant that we cannot make fundamental changes to our entitlement programs.”
    “For these reasons, 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,” he said. (Read the letter here)
    House Republican leadership aides told CBS News that Boehner will work with the Senate leadership in an attempt to reach a deal that meets the GOP’s two central requirements: That spending cuts are equal to or greater than debt limit increase and that there are no new taxes…. – CBS New, 7-22-11
  • Obama-Boehner talks collapse; each side blames the other: Debt-reduction negotiations between President Obama and House Speaker John A. Boehner collapsed Friday, derailing an effort to reach a landmark agreement to cut spending, overhaul the tax code and avert a government default.
    In subsequent statements, both sides blamed the other for an impasse that threatens to plunge the nation into a fiscal crisis if the government fails to meet a looming deadline to raise the federal debt ceiling.
    Announcing the collapse, Boehner (R-Ohio) said he could not overcome disputes with Obama on taxes and entitlements.
    Appearing before reporters at the White House, Obama said he had been willing to agree to a deal that was more generous to Republican interests than to those of his fellow Democrats. “It’s hard to understand why Speaker Boehner would walk away from this kind of deal,” he said. “The vast majority of the American people believe we should have a balanced approach” between revenues and cuts.
    Saying that “we have now run out of time,” Obama summoned Boehner, House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) to the White House at 11 a.m. Saturday.
    “They’re going to have to explain to me how it is that we are going to avoid a default,” he said. He later said he was confident that a default could be avoided…. – WSJ, 7-22-11
  • Obama allows for possibility of default, saying ‘if’ instead of expressing confidence US won’t: 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. Said Obama: “We will not default. I am confident of that.”… – Washingtn Post, 7-22-11
  • Debt talks break down; Volatility ahead: Shortly before the latest bust up in Washington, Kathy Lien Director, Global Research & Analysis at GFT wrote:

    Barack Obama’s Presidency and his chance of reelection could very well be defined by what happens over the next week. If the Senate fails to raise the debt ceiling either temporarily or permanently, panic selling of U.S. dollars could drive the greenback to fresh lows against all of the major currencies. The weakness of USD/JPY and USD/CHF confirms that investors are worried about the developments or the lack thereof in the coming week.

    Ultimately there are three scenarios, according to Lien:

    Scenario 1 – Watered Down Debt Deal Passed – Very Dollar Bullish Scenario 2 – Temporary Increase to Debt Ceiling – Mildly Dollar Bullish Scenario 3 – Throw Up their Hands and Let the U.S. Default – Very Dollar Bearish

    For not it appears we’ve moved closer to scenario 2…. – CBS Market Watch, 7-22-11

JULY 22, 2011: DEBT DEAL DEADLINE — OBAMA HOLDS TOWN HALL ON DEBT CRISIS — SENATE VOTES DOWN CUT, CAP, AND BALANCE

“Frankly, we are not close to an agreement. I would just suggest it is going to be a hot weekend here in Washington, D.C.” — House Speaker John Boehner

“I have talked to my lawyers. They are not persuaded that that is a winning argument. So, the challenge for me is to make sure that we do not default, but to do so in a way that is as balanced as possible and gets us at least a down payment on solving this problem.” President Obama said in response to a question about the Constitutional argument at a townhall at the University of Maryland.

“We’re going to dispose of this legislation as it needs to be, so that President Obama and the speaker can move forward on a [plan] that will have some revenue in it.” — Senate Majority Leader Harry Reid (D-Nev.)

“It’s a great opportunity for him to talk to young people, to students, about how this is really a debate about the economy and jobs and the need to stabilize the foundation of the economy and creating jobs and lessening the economic anxiety out there, felt by students.” — White House Press Secretary Jay Carney said Thursday aboutr President Obama’s Town Hall at the University of Maryland

  • President Obama Discusses Debt Crisis at University of Maryland Town Hall – Transcript — WH, 7-22-11
  • Obama stresses need for more tax revenue; Senate rejects House debt plan: President Obama insisted Friday that any broad deficit-reduction plan must include new tax revenue in addition to large spending cuts, and the Senate rejected a bill from the Republican-controlled House that would have required a balanced budget amendment and massive cuts, but no tax hikes.
    Speaking at a town hall meeting at the University of Maryland in College Park, Obama told a largely supportive audience, “We can’t just close our deficit with spending cuts alone.” That would mean senior citizens would have to “pay a lot more for Medicare,” students would have trouble getting education loans, job training programs would be trimmed and there were be “devastating cuts” in medical and clean-energy research, he said.
    “If we only did it with cuts, if we did not get any revenue to help close this gap . . . then a lot of ordinary people would be hurt, and the country as a whole would be hurt,” Obama said. “And that doesn’t make any sense. It’s not fair. And that’s why I’ve said, if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well.”
    “This idea of balance, this idea of shared sacrifice, of a deficit plan that includes tough spending cuts but also includes tax reform that raises more revenue, this isn’t just my position,” he said. “This isn’t just a Democratic position. This isn’t some wild-eyed socialist position.” Rather, it argued, it is a position taken in the past by presidents from both parties who have signed major deficit-reduction deals.
    “So we can pass a balanced plan like this,” Obama said. “The only people we have left to convince are some folks in the House of Representatives. We’re going to keep working on that.”… – WaPO, 7-22-11
  • Obama again presses GOP to move on taxes in debt deal: If President Obama is indeed pursuing a deal with House Speaker John Boehner that would lack an ironclad agreement to boost government receipts, he didn’t show his hand Friday.
    At a town-hall-style event at the University of Maryland, Obama again restated his long-standing position that any accord to raise the federal debt ceiling must combine spending cuts with revenue generators stemming from a rewrite of the tax code.
    “We can’t just close our deficit with spending cuts alone,” Obama said before a crowd in College Park, Md. “If we only do it with cuts … a lot of ordinary people would be hurt and the country as whole would be hurt.”… – LAT, 7-22-11
  • Senate Rejects House Budget Plan; Obama Calls for Deal: The Senate on Friday rejected a House plan to substantially cut government spending and raise the federal debt limit contingent on a balanced budget proposal, leaving Congress up in the air about how to resolve its impasse over the federal debt ceiling and avoid a government default.
    Senators voted 51 to 46 along party lines to set aside the measure, known as the “cut, cap and balance” bill, which was sent to the Senate by the House this week and seen by conservative House members as their preferred option for increasing the debt ceiling. For many House Republicans, the legislation was their best offer in the continuing standoff with President Obama and Congressional Democrats.
    After the vote, Senator Harry Reid, the Nevada Democrat and majority leader, said the Senate was for the moment abandoning its fallback plan and would not immediately move ahead with a procedural maneuver proposed by Senator Mitch McConnell of Kentucky to increase the debt limit. He said the Senate would instead await the results of negotiations between Mr. Obama and the House speaker, John A. Boehner of Ohio, over a broad deficit reduction package.
    “The path to avert default now runs through the House of Representatives,” Mr. Reid said after Democrats voted against the House plan. He said that he was canceling plans to keep the Senate in session over the weekend and that lawmakers would instead reconvene Monday, just more than a week before the Aug. 2 deadline set by the Treasury Department for increasing the $14.3 trillion limit.
    Mr. Obama said at a town hall meeting where he was taking questions Friday morning that he was willing to agree to “historic” spending cuts in an effort to trim the nation’s budget deficit, and urged Congressional factions to come together and reach a deal. He said it was not conceivable that the United States would default on its debt.
    “This is a rare opportunity for both parties to come together and choose a path where we stop putting so much debt on our credit card,” Mr. Obama said…. – NYT, 7-22-11
  • Senate votes down GOP debt ceiling plan: The Senate on Friday defeated the Republican “Cut, Cap and Balance” proposal, a move that puts the onus on President Obama and House Speaker John Boehner to present a plan soon to raise the debt ceiling or risk a potentially catastrophic default.
    The procedural vote to kill the measure that was approved by the Republican-controlled House on Tuesday was along party lines in the Democratic-controlled Senate.
    “We’re going to dispose of this legislation as it needs to be, so that President Obama and the speaker can move forward on a [plan] that will have some revenue in it,” Senate Majority Leader Harry Reid (D-Nev.) said just before the roll call began.
    Friday had been seen as a potentially critical date in the weeks-long budget debate. According to the Treasury Department, lawmakers must agree to a plan that raises the debt limit before Aug. 2 or the federal government could default on its obligations for the first time in the nation’s history…. – LAT, 7-22-11
  • John Boehner: Debt talks will make for a “hot weekend here in Washington”: “It’s going to be a hot weekend here in Washington, D.C.,” House Speaker John Boehner said today.
    Nevermind that the heat index for the District on Friday is 120 degrees — lawmakers will be sweating in their Washington offices as the clock ticks down toward a possible U.S. default.
    The Senate on Friday rejected a Republican plan that would have made raising the debt ceiling contingent on passing a balanced budget amendment. Democratic leaders blasted the plan as bad policy and hardly worthy of consideration. But Boehner said today it’s still the only plan to raise the debt ceiling that he supports.
    Calling himself a “happy warrior” on behalf of the GOP plan — dubbed “cut, cap and balance” — Boehner said, “The House has done its job.” The speaker refused to acknowledge the need for an alternative plan. “If [members of the Senate] don’t like our version of ‘cut, cap and balance’… then what’s their plan?” he asked. “They can make amendments and send it back over.”… – CBS News, 7-22-11
  • Boehner: ‘We are not close’ to reaching a debt deal with Obama: Speaker John Boehner (R-Ohio) on Friday assured House Republicans that he is not on the verge of striking a deal with the White House to raise the debt ceiling.
    “Frankly, we are not close to an agreement,” Boehner said. “I would just suggest it is going to be a hot weekend here in Washington, D.C.”
    Boehner told reporters there “never was an agreement” with the White House on a grand bargain.
    But he told the GOP conference that the House needs to be prepared to pass something related to the debt ceiling by next Wednesday, according to Rep. Peter King (R-N.Y.) Others in the meeting said Boehner was talking about fall-back options because it would be irresponsible not to.
    GOP members on Friday insisted the Senate should amend “Cut, Cap and Balance” and send an alternative back to the House. Boehner claimed two-thirds of the pubic supports the plan, which would cut at least $6 trillion in spending over a decade without revenue increases.
    “The House has done its job, and I hope the Senate will do theirs. And if they don’t our version of ‘Cut, Cap and Balance,’ guess what?
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