Debt Negotiations: Can A Deal Be Struck?

WATCH Debt Showdown

Even before President Obama could return for talks with Congressional leaders on the debt ceiling and deficit reduction, Speaker of the House John Boehner pulled the plug.

The talks are some of the biggest policy discussions in decades, but Speaker Boehner said Saturday night in a paper statement that he is now skeptical that an agreement can be reached in a $4 trillion deal.

"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," Boehner said.

Instead of a grand bargain as President Obama has been hoping for, Boehner now says he's concentrating on producing a smaller measure that "still meets our call for spending reforms and cuts greater than the amount of any debt limit increase."

Boehner said he wants to focus on a smaller $2 trillion deal, as Vice President Joe Biden was discussing with a bipartisan group prior to the president's involvement, as opposed to the $4 trillion deficit cuts deal that was anticipated from today's planned negotiations.

The White House issued a statement soon after Boehner's, saying that while the president sees solving the country's fiscal issues as imperative, the administration sees the Republicans' demands as putting an unfair burden on the middle class and elderly.

"We cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts," White House Communications Director Dan Pfeiffer said in a statement Saturday night. "We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree."

While Boehner has been receiving pressure from Tea Party members, who are unwilling to compromise on raising taxes, the White House was also receiving pushback from Democrats wary of potential cuts to programs such as Social Security and Medicare.

Boehner's Saturday night statement marked a major shift in the tone surrounding the debt negotiations, at a time when it seemed that a bipartisan agreement was imminent.

In contrast to his statement last night, Speaker Boehner expressed hope on Friday that a deal could be struck.

"We hope the Democrat counterparts will join us and seize this opportunity to do something big for our economy, and frankly, for our future, and to, hopefully, get Americans back to work," Boehner said Friday.

Following Friday's bad jobs report, which showed that the US economy gained only 18,000 jobs in June, Boehner was not alone in calling bipartisan cooperation in reaching a compromise. He was one among many leaders from both parties.

President Obama similarly called the negotiations an "extraordinary opportunity," saying the American people expect both parties to work together on reaching compromise.

"That's the least that they should expect of us, not the most that they should expect of us," President Obama said in remarks following Friday's jobs report. "I'm ready to roll up my sleeves over the next several weeks and next several months. I know that people in both parties are ready to do that as well."

Despite the optimistic tone from both parties last week, it does not seem that the political disagreements will be resolved this weekend.

Though the breakdown in the negotiations represents the sort of political bickering that leaders decried last week, Ryan McConaghy, Economic Program Director of the think-tank Third Way, said that leaders in Washington understand that the stakes are high.

"If the economy goes into a recession, voters are going to be very angry," McConaghy said. "They've spent weeks on this, they've both been in the room, and they've both said it's important. They both have something to gain by doing it and they both have something to lose by failing."

McConaghy predicts that if a deal is not struck, a blame game will begin between Republicans and Democrats.

"I think what you'll see, is they realize that you know they'd have to start preparing for the worst and that might meaning starting to assign blame for why deal isn't going to happen," McConaghy said.