Bloomberg News

Obama, Congress Leaders Said to Make Little Progress on Debt

July 10, 2011

(Updates with comment from Pelosi in sixth paragraph.)

July 10 (Bloomberg) -- President Barack Obama and congressional leaders made little progress in debt-reduction talks a day after House Speaker John Boehner said all sides must settle for a smaller plan than the president seeks, according to congressional aides familiar with the talks.

Before today’s 75-minute meeting at the White House, Obama said “we need to” reach an agreement within the next 10 days to allow an increase in the U.S. debt limit.

Obama scheduled a news conference for 11 a.m. tomorrow. All sides plan to meet every day until an agreement is reached, said one congressional aide who sought anonymity to discuss the private negotiations.

They made little headway on the main issues of raising taxes and cutting entitlement programs as Democrats insisted that any package include new revenue and Republicans balked, said congressional aides familiar with the meeting.

“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,” Don Stewart, spokesman for Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in a statement after the meeting.

House Minority Leader Nancy Pelosi, a California Democrat, said in a statement that she is “still hopeful for a large bipartisan agreement” that could include “more deficit reduction over a longer period of time.” She said she continues to have “serious concerns about shifting billions in Medicaid costs to the states.”

$14.3 Trillion

Obama and congressional leaders are seeking a deficit- slashing deal to pave the way for a vote in Congress to increase the government’s $14.3 trillion debt limit, a move the Treasury Department says is needed by Aug. 2 to avert a default on the nation’s financial obligations.

Yesterday, Boehner of Ohio said he will pursue a smaller deficit reduction accord than the $4 trillion one Obama is seeking because the White House won’t approve a bigger deal without tax increases.

During today’s 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 reiterated his willingness to put everything on the table, including Social Security and Medicare, that person said.

Frustration From Reid

Senate Majority Leader Harry Reid, a Nevada Democrat, expressed frustration that Republicans had repeatedly walked away from the table, according to one congressional aide. House Majority Leader Eric Cantor, a Virginia Republican, left negotiations led by Vice President Joe Biden in a similar stalemate on taxes.

The meeting concluded with the president saying he was not persuaded, and he asked Republicans to come in tomorrow with a plan including numbers, said the Democrat familiar with the talks.

Boehner’s office released a statement that said he told the group he believes the most viable option is a plan based on the discussions led by Biden. The speaker reiterated that he will insist on spending reductions larger than the amount of the debt-limit increase, and no higher taxes, the statement said.

Treasury Secretary Timothy F. Geithner said today the Obama administration wants the most comprehensive deficit-cutting deal possible and reiterated that failing to raise the debt limit could have “catastrophic” consequences for the economy.

“We have to find a way to pass an agreement, but the president is going to keep working toward the largest deal we can do, because that’s the right thing for the country,” Geithner said on NBC’s “Meet the Press” program.

--With assistance from Kate Andersen Brower, Ian Katz, Susan Decker and Julie Hirschfeld Davis in Washington. Editors: Laurie Asseo, Mike Tackett.

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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