07.22.11 10:35 PM ET
Debt Talks Collapse
Never overestimate the ability of Washington’s polarized politicians to fumble away a disagreement, even with the country’s ability to pay its debts on the line.
The House speaker called Obama and said he is walking away from the talks, prompting the president to appear before the cameras in the White House briefing room half an hour later, just after 6 p.m.
“This was an extraordinarily fair deal,” Obama said. “It is hard to understand why Speaker Boehner would walk away from this kind of deal.”
In a scolding tone, Obama summoned the top four Republican and Democratic leaders to the White House on Saturday morning. “They are going to have to explain to me how it is that we are going to avoid default.”
Obama complained that he couldn’t get Boehner to return his call earlier in the day. “I’ve been left at the altar a couple of times now…One of the questions the Republican Party is going to have to answer is, can they say yes to anything?”
As if anyone needed reminding, the federal government will default on its debts in 11 days if no agreement is reached. And the markets could get rattled well before that.
The heart of the gridlock is that most House Republicans are opposed to any tax increases, while Obama needs some revenue boost to sell the deal to his side. It’s not clear whether Boehner could get any deal containing tax hikes through his chamber, which includes 87 freshmen, most of whom ran against out-of-control spending.
Obama said he had offered $1 trillion in cuts to domestic and defense spending and $650 billion in reductions to the big entitlement programs—Medicare, Medicaid, Social Security—that prompted a near-revolt among Democrats on Thursday. “I was willing to take a lot of heat from my party,” he said.
The package also included $1.2 trillion in increased revenue, which Obama said could be accomplished without raising tax rates. He said the plan would eliminate loopholes, certain deductions, and unspecified tax reform.
“If it was unbalanced, it was unbalanced in the direction of not enough revenue,” Obama said, telling reporters they should not write that this is “the usual food fight” between Democrats and Republicans.
Asked by CNN’s Jessica Yellin whether he could guarantee that Social Security checks will go out after the August 2 deadline, the president fired a shot at the Republicans, saying “they would have to take responsibility” for any adjustments that are made in the event of default.
Boehner’s move and Obama’s countermove may turn out to be last-minute theatrics before both parties agree to a short-term extension of the debt ceiling. Neither side believes it can benefit if the government slides into default, but both parties are trying to extract the maximum leverage from the crisis. The problem is that time is so short that a complicated deal has become all but impossible.
In a letter to his colleagues, Boehner offered a very different take on the breakdown.
“During his discussions with the White House," the Ohio Republican said, “it became evident that the White House is simply not serious about ending the spending binge that is destroying jobs and endangering our children’s future. A deal was never reached, and was never really close.
“In the end, we couldn’t connect. Not because of different personalities, but because of different visions for our country.
“The president is emphatic that taxes have to be raised. As a former small businessman, I know tax increases destroy jobs.”