(Updates with comment by Cantor in 11th paragraph.)
July 6 (Bloomberg) -- President Barack Obama said he opposes a deficit-cutting measure allowing for only a short-term increase in the U.S. debt limit as he called a meeting tomorrow with Republican and Democratic lawmakers to seek long-term fixes in the government’s finances.
The president’s comments yesterday were the second time in less than a week he has come to the podium to publicly push lawmakers to secure a deal that addresses basic solutions to deficit spending while averting a first-ever U.S. default on its obligations.
The Obama administration and congressional leaders are working to complete a deal on a long-term budget reduction package by July 22. That would give Congress enough time to craft legislation raising the $14.3 trillion debt limit before Aug. 2, when the Treasury Department has said that its borrowing authority expires. Republicans have signaled they could accept a short-term package -- an outcome that would force Congress to vote a second time on the debt ceiling before the 2012 elections and that Obama would like to avoid.
“I don’t think the American people sent us here to avoid tough problems,” Obama told reporters at the White House. “That’s, in fact, what drives them nuts about Washington, when both parties simply take the path of least resistance. And I don’t want to do that here.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said today that tomorrow’s meeting will be “an opportunity to see if the president is finally willing to agree on a serious plan to pay our bills without killing jobs in the process.”
Republicans have insisted that increases in tax revenue be off the table in any deal, saying that would hurt the economy.
Senate Majority Leader Harry Reid, a Nevada Democrat, said Republicans refused to compromise during talks with Vice President Joe Biden because of their “arbitrary” pledge not to raise taxes.
“Never mind that the deal is in the best interests of the country and gives Republicans much of what they say they want,” Reid said. “They walked away from the table.”
House Speaker John Boehner, an Ohio Republican, said in a statement that the president’s proposals for new sources of revenue wouldn’t muster enough support to pass Congress.
“I’m happy to discuss these issues at the White House, but such discussions will be fruitless until the president recognizes economic and legislative reality,” Boehner said.
House Majority Leader Eric Cantor, of Virginia, told reporters today that Republicans “will be glad to talk about” closing some loopholes if Democrats agree to offsetting tax cuts elsewhere.
Boehner and Obama met privately at the White House July 3 for talks on the deficit, Boehner spokesman Brendan Buck confirmed in an e-mail today. Obama yesterday said he and his team held “a series of discussions” over the Fourth of July weekend that he said “made progress.”
The White House and Democrats have been intensifying a showdown with Republicans over whether tax increases should be part of a final agreement. While Obama didn’t go so far as to say that he would veto a short-term measure, he said the negotiations present “a unique opportunity to do something big to tackle our deficit,” and repeated his calls for a “balanced approach” to a solution that includes both spending cuts and revenue increases.
“It’s my hope that everybody is going to leave their ultimatums at the door, that we’ll all leave our political rhetoric at the door, and that we’re going to do what’s best for our economy and do what’s best for our people,” Obama said. “This should not come down to the last second.”
The calendar may force another option. A more likely outcome is a short-term debt ceiling increase coupled with commensurate spending cuts that lawmakers agree to, buying them time to complete work on a larger measure when they return from their August recess, said Bill Hoagland, a former Republican staff director of the Senate Budget Committee.
“I think it’s too late” for a long-term deal in the next few weeks, Hoagland said.
Reid has scheduled a Senate vote for later this week to demonstrate support in the Democratic-controlled chamber for raising taxes on people who earn $1 million a year or more. His resolution calls on those taxpayers to “make a more meaningful contribution to the deficit-reduction effort.”
The Democrats and the White House stepped up their push for tax increases when Obama, during a June 29 news conference, accused Republicans of siding with corporate jet owners over assistance for children and health care for the elderly.
In negotiations led by Biden that collapsed two weeks ago, the White House had proposed $400 billion in revenue increases, including ending tax breaks for corporate jets and for oil and gas companies and phasing out deductions for taxpayers earning more than $500,000 a year, according to participants, including Maryland Democratic Representative Chris Van Hollen.
Such a strategy gambles on Republicans dropping their objections to tax increases at the risk of a backlash from tax opponents, said Ed Lorenzen, a senior adviser at the Committee for a Responsible Federal Budget, a bipartisan education and policy center in Washington that examines fiscal matters.
“The dangerous part is that everyone seems to be hardening their positions and ramping up their rhetoric,” Lorenzen said. “What’s hard to know is whether this rhetoric is posturing to satisfy the base or, more likely, both sides are really just locking themselves in,” Lorenzen said.
There are few signs that the two sides have bridged their differences since the Biden-led effort fell apart. Obama held one meeting with McConnell on June 27, after which neither side reported any advancement in resolving their differences.
“Over the July 4 weekend, my team and I had a series of discussions with congressional leaders in both parties,” Obama said yesterday. “We’ve made progress, and I believe that greater progress is within sight, but I don’t want to fool anybody -- we still have to work through some real differences.”
--With assistance from James Rowley in Washington. Editors: Bob Drummond, Mark McQuillan.
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