Obama, congressional leaders stop debt talks to consider options
President Obama and congressional leaders agreed to a cease-fire in debt negotiations to review which proposals seemed most likely to pass the House and Senate and arrive at consensus by Saturday.
Obama planned to hold a news conference at the White House at 11 a.m. EDT Friday as he presses his case for a large deficit-reduction deal to allow a congressional vote to raise the nation’s $14.3-trillion debt ceiling and avert a federal default next month.
Republican and Democratic leaders in the House were to confer with their rank and file in separate meetings earlier Friday.
The president told the group on Thursday he still believed a plan to reduce deficits by $2 trillion or more could be achieved if both sides move from hardened positions on disagreements over social programs and taxes.
“It’s decision time,” Obama said, according to a Democratic official familiar with the closed talks, who would describe them only on condition of anonymity.
The potential risks of the protracted debt ceiling debate were underscored Thursday when another financial rating agency, Standard & Poor’s, moved toward a downgrade of the federal government’s credit rating.
Following a similar move by Moody’s Investors Services a day earlier, officials at Standard & Poor’s cited uncertainty caused by the debt ceiling debate, which it said had “only become more entangled” in recent weeks.
“As a consequence, we now believe that we could lower our ratings on the U.S. within three months,” the firm said.
The president told the leaders at the White House meeting that he expected them to find a route to agreement within the next 24 to 36 hours. If not, another meeting would be called this weekend, according to a Republican official familiar with the talks.
“I want to do the largest deal possible,” Obama told the group. “We need concrete plans to move this forward.”
During the break in talks on Friday, congressional leaders will canvas members to ascertain how many votes there are for the various proposals, including a larger deal or a back-up plan allowing Obama to order debt ceiling increases without congressional approval, but with a smaller package of spending cuts.
Obama told the group Thursday that the congressional leaders now knew “all of the options,” according to the Democratic official. “We’re virtually out of time.”
In the Thursday session, administration officials walked through proposals on healthcare savings, tax breaks and changes in the budget process.
Republicans want cuts greater than the $2.4 trillion it would take to increase the debt ceiling through next year, but have refused to consider higher taxes on wealthy Americans or corporations, as proposed by Democrats in exchange for reductions in Medicare and other programs.
One proposal offered by the administration would expand a payroll tax cut that expires at the end of this year in exchange for closing credits and loopholes on ethanol, corporate jet owners, oil and gas companies and others.
Republicans have been open to variations of such proposals, but pulled back on Thursday, a congressional aide said. The proposal presented Thursday amounted to $200 billion and included limits on itemized deductions for wealthy households, according to a Democratic official familiar with the talks. The administration also discussed extending unemployment insurance for jobless Americans.
The president said he and his staff would be on call over the next several days as congressional leaders conferred with rank-and-file lawmakers, according to the Republican official.
Aides said that after an contentious meeting earlier this week, Thursday’s talks were polite and cordial. Rep. Eric Cantor (R-Va.), the Republican majority leader who clashed with Obama in an earlier session, did not speak up at Thursday’s meeting, several officials said.
House Speaker John A. Boehner (R-Ohio) pressed the White House to “get serious about reducing spending in a meaningful way,” according to the Republican official.
Kathleen Hennessey in the Washington bureau contributed to this report.
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