Top Republicans Walk Out of VP Biden's Debt Talks

June 23, 2011 -- Vice President Joe Biden's debt ceiling talks hit a brick wall Thursday after two key Republicans walked out in a dispute over the idea of raising taxes.

The departures of House Majority Leader Eric Cantor, R-Va., and Senate Minority Whip Jon Kyl, R-Ariz., Thursday morning left the formerly bicameral, bipartisan talks with no Republicans left at the negotiating table.

Cantor said the group had reached an "impasse" because Republicans oppose any and all tax hikes, while Democrats say they are a necessary in a balanced attempt at deficit reduction.

"As it stands, the Democrats continue to insist that any deal must include tax increases," Cantor said. "There is not support in the House for a tax increase, and I don't believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue."

Shortly after, Kyl announced that he was abandoning the talks as well.

"The White House and Democrats are insisting on job-killing tax hikes and new spending," Kyl said in a joint statement issued with Senate Minority Leader Mitch McConnell, R-Mo. "That proposal won't address our fiscal crisis, our jobs crisis, or protect and reform entitlements, and a bill with new spending and higher taxes would fail with bipartisan opposition -- as it should. President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit. He can't have both. But we need to hear from him."

The negotiations were intended to develop a plan that would gain enough support to pass both Houses of Congress before the Obama administration's Aug. 2 deadline to raise the $14.3 trillion debt ceiling.

The vice president's negotiating group, which began talks May 5, met three times last week, twice already this week and was scheduled to have its 11th meeting Thursday afternoon. But that meeting was cancelled after Cantor and Kyl backed out, leaving the current state of the discussions unclear.

Aboard Air Force One today, White House Press Secretary Jay Carney said that the deficit talks "are essentially in abeyance for now" and that they "may or may not resume in different forms." He did not, however, have any "announcement about specific talks" to come in the near future.

Carney made clear that the talks were always going to reach this point.

"It is not as though this negotiating group could simply declare into law what they agreed on," he said. "So the process was always going to have to proceed out of the negotiating room and move forward with the engagement of the speaker, Senate leaders, House minority leader, the president, et cetera.

"These talks were designed to find areas of common ground," he added. "A lot of progress has been made. Obviously, part of the design of this was to find areas of agreement and common ground and identify areas of disagreement which could then be referred to the leaders in Congress ... to the president, and [the leaders would] try to work out some of the areas of disagreement. So, these talks are in abeyance, but we expect going forward that we will continue to address these issues in search of a compromise."

House Speaker John Boehner, R-Ohio, accepted the president's invitation to come to the White House late Wednesday afternoon "just to discuss a variety of issues following up on conversations they had on the golf course on Saturday," Carney said.

Following the developments today, Boehner said he expected to hear from the president again soon.

"This is the moment, folks," Boehner said. "The fight isn't about numbers; it's about jobs; it's about the future of our country. And we've got a chance to do something big, and we have that chance to do it now. ... For the sake of our economy, the sake for the future of our kids and grandkids, this is a chance and an opportunity that we cannot afford to allow to pass."

Republicans have vowed not to raise the debt ceiling unless a plan to drastically reduce the deficit is attached to the bill.

Heading into negotiations Monday, Cantor declared it was "crunch time" if the group was going to reach an agreement. If Congress fails to pass a bill allowing the federal government to borrow more money, America could default on its debt obligations, a scenario Treasury Secretary Timothy Geithner warned would be "catastrophic."

"The people who would take this to edge, to the brink, they'll own responsibility for calling it to question, our credit worthiness, and that would not be a responsible thing to do," Geithner told ABC News' Christiane Amanpour in April.

Avoiding an economic catastrophe now seems to fall to Obama, Boehner and Senate Majority Leader Harry Reid, D-Nev.

Reid said he had not received an invitation to any formal meetings with the president and speaker.

With Kyl and Cantor gone, the remaining members of the group are Senate Finance Committee Chairman Max Baucus, D-Mont.; Senate Appropriations Chairman Daniel Inouye, D-Hawaii; Assistant House Minority Leader James Clyburn, D-S.C.; and House Budget Committee ranking member Chris Van Hollen, D-Md.

In April, President Obama appointed Biden to lead the bipartisan deficit reduction talks with a group of lawmakers from each of the four caucuses. But as each week has gone by without a deal, lawmakers have been calling on the president to be personally involved in the discussions.

On the Senate floor Thursday morning, McConnell blasted the president for standing in the background.

"Where in the world has President Obama been for the past month?" McConnell asked. "What does he propose? What is he willing to do to reduce the debt and avoid the crisis that is building on his watch?"

Senate Democrats blasted Cantor and Kyl for the breakup of the talks Thursday, and predicted that the negotiations would now fall into the hands of the leadership instead.

"I think it's now, with what Kyl and Cantor's done, I think it's in the hands of the speaker and the president and, sadly, probably, me," Reid said, adding that the Senate's planned August recess is no longer a sure thing.

"I'm terribly disappointed," Reid said of the Republicans' dropping out of the talks. "It appears they're giving up. We can't give up."

With the leadership poised to take over, the days of the so-called Gang of Six-turned- Gang of Five working on economic proposals in addition to the Biden-led formal discussions may be ending.

"My honest feeling is that I think that we're beyond gangs of five and gangs of sixes," Reid said, while noting some progress was made before the talks collapsed. "The Republicans should stop playing chicken and pushing us too close to that line. It's not going to be good for our country or the world."

Boehner said that Republicans are opposed to any tax increases and called on the president to "engage" in order for a deal to be properly worked out.

"Several weeks ago after we were all down at the White House, our entire conference ... I said that if we're going to meet the president's timetable to come to an agreement by the end of this month, that he needs to engage," Boehner said. "And if we're going to meet that timeline, the president is going to have to engage.

"I know the frustration that [Cantor] feels when Democrat[ic] members continue to want to bring tax hikes into this conversation, and insist that we've got to raise taxes on the American people," Boehner added. "I think Mr. Cantor made it clear that these conversations could continue if they take the tax hikes out of the conversation."

The news was not well-received by leading House Democrats either, who were meeting at the White House with President Obama when the news broke that the talks had fallen apart.

"We left the meeting to find that Leader Cantor had walked out of the meeting, just as he has walked out of the meetings, because Democrats want to raise taxes," said House Minority Leader Nancy Pelosi, D-Calif. "Yes, we do want to remove tax subsidies for big oil. We want to remove tax breaks for corporations that send jobs overseas. That list goes on. I don't know if that's a reason to walk away from the table when we're trying to find a balanced approach."

"I'm disappointed that Leader Cantor has chosen to leave the talks," said Rep. Van Hollen, a Democrat at the Biden talks. "They had been proceeding well, although there is no doubt that there were some very difficult issues that needed to be decided.

"The speaker of the House said it was time for an adult moment. Adult moments mean it's time for making tough decisions," he added. "The reality here is that until our Republican colleagues are more concerned about the need to reduce the deficit than they're worried about what Grover Norquist will say, we're going to have a really difficult time reducing the deficit."