Boehner and Obama Nearing Deal on Cuts and Taxes

Efforts to craft a $3 trillion deficit-reduction deal gained traction on Thursday as the White House and congressional leaders scrambled to sort through competing options and stave off a devastating default.

Private talks between Speaker John Boehner and President Barack Obama have left GOP lawmakers on edge — frustrated about an information gap, ill prepared for quick review of any potential mega-deal and, perhaps most worrisome for Boehner, wary of anything their party leaders tell them. Photo via Journal Foreign Relations/Flickr

With the clock ticking toward an August 2 deadline to raise the U.S. debt ceiling, President Barack Obama and the top Republican in Congress, House Speaker John Boehner, worked toward a budget plan that would include deep spending cuts but might leave tax reform for later.

Congressional officials said that the two men, who had abandoned earlier talks toward a deal when leaks provoked Republicans’ protests, were closing in on a package calling for $3 trillion in savings from substantial spending cuts and future revenue produced by a tax code overhaul. If it could be sold to Congress, the plan could clear the way for a vote to increase the federal debt ceiling before an August 2 deadline.

The first reaction to the still-unfinished proposal hardly suggested a quick resolution. This time, the flak came mostly from senior Congressional Democrats. Obama worked to ease concerns from members of his party, inviting Democratic leaders to a White House meeting on Thursday evening that lasted two hours.

Barack Obama and Boehner had supported tight secrecy to prevent a recurrence of the Republican rebellion that stymied their effort earlier this month. With only a few top advisers involved, the news that they were nearing an accord broke only after administration officials told Democratic Congressional leaders on Wednesday night about the outlines of the Obama-Boehner discussion, following talks earlier in the day between the president, Boehner and Representative Eric Cantor of Virginia, the No. 2 House Republican.

Hours before the Congressional Democrats met with Mr. Obama, they had expressed alarm publicly to reporters that the emerging proposal seemed too reliant on deep spending cuts compared to new revenue. In private, some vented their criticism at Mr. Obama’s budget director, Jacob J. Lew, during a heated party lunch of Senate Democrats on Thursday.

The Senate majority leader Harry Reid said:“The president always talked about balance: there had to be some fairness in this, this can’t be all cuts. The caucus agrees with that. I hope the president agrees with that, and I’m confident he will.”

But aides state that the president and Mr. Boehner were moving ahead with their plan, trying to agree on matters like how much new revenue would be raised, how much would go to deficit reduction, how much to lower tax rates and, perhaps most critical, how to enforce the requirement for new tax revenue through painful consequences for both parties should they be unable to overhaul the tax code in 2012.

The White House wants a trigger that would raise taxes on the wealthy; Mr. Boehner wants the potential penalty for inaction to include repeal of the Obama health care law’s mandate that all individuals purchase health insurance after 2014.

Officials on all sides of the tense negotiations warned that no firm deal to raise the nation’s $14.3 trillion borrowing ceiling was in hand, and tried to play down progress — if only to stave off attempts to change the deal’s shape or to kill it by hard-liners on both sides of the debate.

A spokesman for Mr. Boehner Kevin Smith said:“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report.”

The White House press secretary Jay Carney denied that any agreement was imminent: “There is no deal. We are not close to a deal.”

The same issues that foiled earlier negotiations between Mr. Obama and Mr. Boehner remain. Many Republicans oppose abandoning the party’s no-compromise stand against any new taxes, while many Democrats fear a “grand bargain” will undercut their party’s ability in the 2012 campaigns to use Republicans’ support of deep cuts in Medicare, Medicaid and Social Security against them.

Democrats already suggest the potential Obama-Boehner deal is more tilted toward Republican priorities than a bipartisan plan suggested this week by Gang of Six senators, three Republicans and three Democrats.

The executive vice president for government affairs of the U.S. Chamber of Commerce R. Bruce Josten wrote a blog post warning that such a potential default “has real, immediate, and potentially catastrophic consequences.”[Photo via Journal Foreign Relations/Flickr; via The New York Times, Reuters]

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