Deficit-reduction negotiations broke down abruptly on July 22 after House Speaker John Boehner, R-Ohio., informed President Obama he was pulling out of talks. A visibly angry Obama, in a hastily scheduled appearance in the White House briefing room, told reporters that Boehner was “walking away” from the opportunity to reach a major deal that would have included more than $1 trillion in discretionary spending cuts, $650 billion in entitlement program savings and $1.2 trillion in additional revenue. Obama noted that revenue increases would have been accomplished “by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could have lowered rates generally while broadening the base.”
Boehner, in a letter to House Republicans on July 22, said he ended talks with the White House over disagreements about including tax increases and entitlement cuts in a final deal. “I have decided to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find the path forward,” Boehner said. “A deal was never reached and was never really close,” he said, contrary to a flurry of stories on July 21 that Obama and the speaker had reached an agreement or were on the verge of one.
The president said he has summoned the top Senate and House leadership to the White House on July 23 to “come up with any plans” to avoid default on August 2. Obama made clear that legislation increasing the debt limit must extend “through the next election, into 2013.” He said, “The notion that five or six or eight months from now we’ll be in a better position to try to solve this problem makes no sense.”
Earlier in the day, Obama spoke at a town hall meeting at the University of Maryland and made the case for a large deficit deal. In answer to a question about averting a government default, the president made clear he does not have the constitutional authority under the debt clause of the 14th Amendment to bypass Congress and unilaterally take measures to make sure the U.S. meets its debt obligations.
“I have talked to my lawyers. They are not persuaded that that is a winning argument,” the president said, noting that the debt ceiling clause is a statutory rule, not a constitutional rule. While the prospects remain uncertain for passage of the fail-safe plan, Obama insisted that a government default is not an option. “The United States of America does not run out without paying the tab. We pay our bills. We meet our obligations,” Obama asserted. “We have never defaulted on our debt. We’re not going to do it now.”
Congressional reaction to the news of Boehner abandoning the talks with Obama was swift and invariably ran along the partisan divisions that have tempered the negotiations in the past few weeks. Senate Majority Leader Harry Reid, D-Nev., once again blamed Republicans for holding on to ideological opposition to tax law changes sought by President Obama. In a written statement, Reid said: “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 applaud President Obama for insisting that any deal to reduce our deficit be balanced between cuts and revenues.” House Minority Leader Steny Hoyer, D-Md., also focused on developing a long-term solution that would help calm the markets. “The markets have made clear that a short-term extension is not sufficient and would result in very serious consequences. Democrats have made it abundantly clear we will not accept a short-term deal, but Republicans have once again refused to negotiate for the long-term,” said Hoyer.
Republican leadership appeared pleased that the talks were returning to Congress as Senate Minority Leader Mitch McConnell, R-Ky. praised Boehner for holding his ground. “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,” said McConnell in a written statement. “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.”
House GOP leaders continued to reject any compromise plan offered by President Obama and the Democrats that would include raising tax revenues as a way to lower the budget deficit. Instead, House GOP Study Committee Chairman Jim Jordan, R-Ohio, said the Cut, Cap and Balance legislation that already passed the House contains the spending cuts and budget controls to persuade Republicans to support an increase in the nation’s debt limit. Republicans will not support any “grand bargain” crafted at the last minute, Jordan said.
By Jeff Carlson, Stephen K. Cooper and Paula Cruickshank, CCH News Staff
McConnell Statement on Debt Talks
Speaker Boehner’s Dear Colleague Letter on Deficit-Reduction Negotiations
Hoyer Statement on Speaker Boehner’s Decision to End Debt Limit Talks
Remarks by the President