Republicans Stand Firm Against Tax Hikes, Despite Pressure From Obama

July 12, 2011 - 5:26 AM

Obama debt deal

President Barack Obama talks about the ongoing budget negotiations, Monday, July 11, 2011, in the briefing room of the White House. (AP Photo/Pablo Martinez Monsivais)

WASHINGTON (AP) - President Barack Obama and GOP lawmakers, hundreds of billions of dollars short of their goal and seemingly trapped in inflexible bargaining positions, are struggling for agreement on $2 trillion-plus in budget cuts as the price for maintaining the government's ability to borrow.

Lawmakers were asked to return to the White House for talks Tuesday afternoon after a 90-minute Monday session produced no progress other than to identify the size of the gap between Republicans and Obama.

Neither side showed any give that might generate hopes for a speedy agreement. Instead, Republicans again took a firm stand against revenue increases while Obama and his Democratic allies insisted that they be part of any equation that cuts programs like Medicare.

"I do not see a path to a deal if they don't budge, period," Obama said.

At the same time, the president turned up the pressure by announcing he won't sign any short-term debt limit increases.

"We are going to get this done," Obama insisted during a news conference.

Obama's declaration seemed aimed at pressuring lawmakers to continue to strive for the largest deficit reduction plan possible, even though hopes for a "grand bargain" mixing a complete overhaul of the tax code with cuts to benefits programs like Medicare and Social Security fizzled over the weekend.

An advocate of the bigger bargain, House Speaker John Boehner, R-Ohio, explored the idea but scotched it in its infancy after learning the extent of White House demands for tax increases.

"The American people will not accept -- and the House cannot pass -- a bill that raises taxes on job creators," Boehner said Monday before heading to the White House.

Despite lingering hopes for a larger deal, the goal of the talks is to produce spending cuts of at least $2.4 trillion or so over the coming decade. Such cuts wouldn't do enough to address deficits that threaten the economy, but they would represent a down payment on further reductions that would be imposed after next year's elections.

The $2.4 trillion figure would meet the House Republicans' own standard of a debt-cutting package: one that would exceed the size of the increase in the debt limit, and provide enough borrowing room to get the country through 2012.

The group of negotiators includes Obama, other top administration officials and a bipartisan group of the eight top leaders of Congress. At Monday's session, they heard competing versions of how much progress had been made in talks led by Vice President Joe Biden in May and June.

House Majority Leader Eric Cantor, R-Va., a participant who left the Biden talks last month because of Democratic demands on taxes, spelled out potential spending cuts that had been identified. But Democratic lawmakers made clear that such a cutting-only approach without tax increases on wealthier Americans would never pass the Democratic-led Senate or the House, where Democratic votes would be needed, too.

Cantor, aides said, outlined up to $2.3 trillion in spending cuts over the upcoming decade, with $1.3 trillion coming from squeezing the day-to-day budgets of Cabinet agencies, including the Pentagon.

Cantor erred on the high end of the savings range in virtually every instance. The White House countered that the cuts really approached $1.7 trillion or so, which would leave negotiators $700 billion short of the $2.4 trillion being sought.

Republicans are also suspicious that Democrats want most of the spending cuts to be concentrated in the later years of a deal. They say that despite promising cuts of $1.1 trillion from Cabinet agency operating budgets, the White House is insisting on a two-year freeze in such spending at the current level of $1.05 trillion. At issue is the amount approved by Congress each year in annual appropriations bills.

Obama spent most of his time encouraging lawmakers to reconsider a bigger deal, on the order of some $4 trillion in spending cuts and tax hikes over 10 years. Democrats familiar with the talks said it was clear after the meeting that negotiators are going to have come up with some new ideas in hopes of finding a compromise.

As a measure of the political peril Obama is courting, the president is willing to discuss raising the Medicare eligibility age from 65 to 67 years, provided Republicans would allow Bush-era tax cuts for the wealthy to expire at the end of 2012 and agree to other unspecified demands, according to a Democratic congressional aide.

All the officials familiar with the talks spoke on condition of anonymity to disclose details of the private discussions.