No Deal: Debt Ceiling Talks Between Obama, Boehner Break Down

Jul 22, 2011 6:17pm

ABC News’ Jonathan Karl (@jonkarl) reports:

Talks between House Speaker John Boehner and President Obama to raise the debt ceiling in conjunction with sweeping spending cuts and tax and entitlement reform have broken down. There will be no “grand bargain” to deal with the debt crisis and raise the debt ceiling.

Boehner’s decision to abandon negotiations with President Obama puts an end to a deal that would have cut spending by up to $3.5 trillion over the next 10 years and increased tax revenues by close to a trillion dollars. But the $14.3 trillion debt ceiling must be raised by Aug. 2nd to avoid a government default.

“We have now run out of time,” a visibly angry Obama declared at a hastily arranged press conference in the White House briefing room. Watch Obama Here

He said he has summoned Boehner, House Minority Leader Nancy Pelosi, Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid to the White House for an emergency meeting at 11am on Saturday.

“I expect them to have an answer as to how they will get this thing done over the next week,” Obama said. Both sides agree that a proposal should be hammered out over the weekend.

Talks now begin between Boehner and senate leaders on a far less ambitious a Plan B.

Boehner held his own press conference after 7 p.m. Friday night and said the talks broke down because “The White House moved the goal posts.”

Specifically, he said the two sides had agreed on an unspecified amount of revenue to be included in deficit reduction, achieved by broadening the number of Americans who pay taxes and lowering general tax rates. But he said President Obama on Thursday demanded another $400 billion in revenue, which Boehner said “was going to be nothing more than a tax hike on the American people.” Watch Boehner Here

It is clear, however, that Boehner and Cantor were ready to accept up to $800 billion in revenue measures as part of a grand bargain. But when that number jumped, in part because of pressure from Democrats, the talks broke down.

Boehner sent a letter to his Republican colleagues explaining his decision to pull out of talks for a “grand bargain.” Here are some highlights:

“It has become evident that the White House is not serious about ending the spending binge that is destroying jobs and endangering our children’s future,” he wrote, adding, “A deal was never reached, and was never really close.

“The president is emphatic that taxes have to be raised. … The president is emphatic that we cannot make fundamental changes to our entitlement programs,” Boehner wrote.

“For these reasons, I have decided to end discussions with the White House and begin conversations with the leaders in the Senate in an effort to find a path forward.”

Reid and McConnell had been working on a backup, failsafe proposal until this week, when hopes for a “grand bargain” were rekindled.

A senior GOP aide said that Reid, McConnell proposal, which was never finalized, and would have given the president carte blanche to raise the debt ceiling, but not reformed entitlements, the tax code, or cut as much spending, will not necessarily be the final product.

“We don’t have a framework or whatever you want to call it going forward with the Senate,” said the aide, who briefed reporters on condition of anonymity. “We’re engaging with the Senate leadership and we know we have a short window of time here, and we’ll get something constructive.

 The president was clearly frustrated that the negotiations for a large package of reforms to deal with the debt had broken down. He and Boehner have been engaged in intense negotiations for weeks, and the President said things appeared to be going well until earlier Friday, “when I couldn’t get a phone call returned.”

“There doesn’t seem to be a capacity for them to say yes,” Obama complained of Republicans. He said they would not accept spending cuts except those that would drive people off Medcaid rolls in states. He said the parties were at about the same amount in terms of deficit reduction, but because Republicans would not include any tax measures, their proposal would be too tough on ordinary Americans, who the President described as “working stiffs” who a re justifiably mad at Washington.

“Ordinary folks, who are struggling every day. And they know they’re getting a raw deal. They’re mad at everybody about it. they’re mad at Democrats and they’re mad at Republicans because they know that somehow no matter how hard they work, they don’t seem to be able to keep up,” Obama said.

Later at his press conference, Boehner said “there’s a reson there are two political parties.” The President, he said, believes in a bigger role for government. But Boehner said when he travels the country he talks to small businesspeople “who don’t understand the taxes they pay.”

President Obama, despite this latest abandonment by Republicans of talks toward a “grand bargain,” said he is confident lawmakers will achieve some agreement to raise the debt ceiling.

“I am confident because I cannot believe that congress would be that irresponsible” as to inflict a “self-inflicted wound” on the economy.

The frustration was mutual. Shortly after Obama’s press conference ended, the press secretary for House Majority Leader Eric Cantor, Brad Daysrping, tweeted that president Obama threw a tantrum:

“As if there’s really a question whether President Obama threw a tantrum at the White House last week – same guy just appeared.”

ABC News’ Z. Byron Wolf, Mary Bruce, John Parkinson and Sunlen Miller contributed reporting.

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