President Barack Obama is challenging Republican lawmakers to present a plan for a smaller-scale deficit reduction program as he attempts to steer them toward his $4 trillion goal, a Democratic aide said.
Obama plans to hold a press conference at 11 a.m. in Washington today, his fifth public remarks on the debt in a week, as he presses lawmakers to reach an agreement to raise the $14.3 trillion U.S. borrowing ceiling before an Aug. 2 deadline. The president and bipartisan congressional negotiators agreed to meet every day until they reach a deal, said one legislative aide on condition of anonymity.
They are divided over taxes and entitlements. Republicans reject Democrats' call for more tax revenue and instead are pressing to cut entitlement programs such as Medicare and Social Security. Democrats insist even the Republicans' proposal for a smaller deficit-cutting plan must include more taxes from higher-income Americans. Obama has said he is willing to cut entitlements in exchange for a Republican agreement to increase taxes.
Democrats want to “enact an agreement that ensures America pays its bills and reduces the deficit in a balanced way without putting all of the burden on seniors and the middle class,” Representative Steny Hoyer of Maryland, the second-ranking House Democrat, said in a statement after a 75-minute negotiating session yesterday at the White House.
Don Stewart, spokesman for Senate Minority Leader Mitch McConnell of Kentucky, underscored Republicans' opposition to any tax increases.
'It's Baffling'
“It's baffling that the president and his party continue to insist on massive tax hikes in the middle of a jobs crisis while refusing to take significant action on spending reductions at a time of record deficits,” Stewart said after the meeting.
U.S. stock futures declined, indicating that the benchmark Standard & Poor's 500 Index will fall for a second day. Futures on the S&P 500 expiring in September fell 1 percent to 1,328.2 at 7:33 a.m. in New York.
Futures on the Dow Jones Industrial Average declined 91 points, or 0.7 percent, to 12,524. The Stoxx Europe 600 Index fell 0.8 percent to 271.68 at 12:32 p.m. in London.
Obama and congressional leaders are seeking a deal to pave the way for a vote in Congress to increase the debt limit, a move the Treasury Department says is needed by Aug. 2 to avert a default on the nation's financial obligations.
'Catastrophic Consequences'
Treasury Secretary Tim Geithner said on “Face the Nation” yesterday that the administration wants the most comprehensive deficit-cutting deal possible. He reiterated that failing to raise the debt limit could have “catastrophic” consequences for the economy.
On July 9, House Speaker John Boehner, an Ohio Republican, said following a phone conversation with Obama that, amid the stalemate over taxes, all sides must settle for a smaller plan than the president seeks. Before yesterday's White House meeting, Obama said “we need to” reach an agreement within the next 10 days.
During the meeting, Obama said he believed a bigger deal might be politically easier, with both sides making philosophically difficult concessions, said a Democrat familiar with the discussions. The president asked Republicans to return today with details of their proposal, including numbers, the person said.
'Huge Hit'
Christine Lagarde, managing director of the International Monetary Fund, said on ABC's “This Week” yesterday that the unresolved situation with the debt ceiling could mean higher interest rates, a higher burden on U.S. taxpayers and “stock markets taking a huge hit and real nasty consequences not just for the United States but for the entire global economy.”
Boehner and the president had both been aiming for a larger compromise that would extend the debt ceiling through the next election in 2012. House and Senate Republicans are insisting that spending cuts exceed any increase in the debt ceiling.
Republicans including Majority Leader Eric Cantor of Virginia, a participant in previous bipartisan debt talks led by Vice President Joe Biden, say that group had identified between $2 trillion and $2.5 trillion in spending cuts that could serve as a framework for an agreement between Obama and congressional leaders.
Democrats, including Maryland Representative Chris Van Hollen, who participated in the Biden effort, say Democrats never agreed to that amount without new revenue in the mix.
“What we talked about was $1.1 trillion in cuts and savings,” Van Hollen said today on “The Early Show” on CBS. “We did not get close to $2 trillion in cuts. And again, the gap there was closing these corporate tax loopholes.”
Doesn't Get Easier
The conflicting accounts underscore the difficulty of reaching a speedy resolution, said Robert Bixby, executive director of the Arlington, Virginia-based Concord Coalition.
“It's not a simple matter of going back to what everybody agreed to in the Biden talks because everybody didn't agree to it,” said Bixby. “It doesn't get any easier just to get a short-term deal.”
McConnell said yesterday on “Fox News Sunday” that he also favors “the biggest deal possible. We're just not going to raise taxes in the middle of this horrible situation.”
The Labor Department reported July 8 that the unemployment rate in June unexpectedly climbed to 9.2 percent, the highest this year. Employers added 18,000 jobs, the weakest growth since September 2010. Payroll growth for May also was revised downward, to 25,000.
Senate Majority Leader Harry Reid, a Nevada Democrat, expressed frustration yesterday that Republicans had repeatedly walked away from the table, according to one congressional aide. Cantor left the Biden negotiations in a similar stalemate on taxes.
Bloomberg News
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