President Obama and House Republican leaders are deep in negotiations over a far-reaching plan to save $3 trillion over the next decade through sharp cuts in agency spending and politically painful changes to popular health and retirement programs, congressional leaders have been told, but there were conflicting accounts on whether the deal would include any immediate increase in taxes.
White House spokesman Jay Carney and House Speaker John A. Boehner (R-Ohio) quickly issued statements saying the two sides are not close to any agreement. Aides to House Majority Leader Eric Cantor (R-Va.) and Senate Minority Leader Mitch McConnell (R-Ky.) also said they were unaware of an imminent deal.
However, congressional Democrats were in a high state of alarm about talks they said were now leading toward a broad deficit-reduction deal that would not immediately include increased revenue. They said this would violate their pledge not to cut benefits for Social Security and Medicare recipients and require them to swallow a deficit-reduction plan that relies solely on spending cuts without raising taxes. Democrats, including Obama, have repeatedly pledged to pursue a deal that contains a “balance” of both spending cuts and revenue increases.
According to another account, the issue of whether Bush-era tax cuts for wealthy Americans will be allowed to expire remains unresolved, as is the question of how much revenue should be raised through tax reform.
Administration officials revealed the substance of the talks to congressional leaders late Wednesday, after Obama met at the White House with Boehner and Cantor, congressional aides said, speaking on the condition of anonymity to detail private discussions. The White House acknowledged that the proposed deal is “to the right of the Gang of Six” and far removed from what Democrats have said would be acceptable.
The White House is seeking a trigger that would allow the Bush-era tax cuts to expire for the nation’s wealthiest households. Boehner has proposed repealing provisions of Obama’s health care law, including the requirement that all individuals purchase health insurance after 2014.
Thursday’s talks revive the “grand bargain” that had been the focus of negotiations between Boehner and Obama earlier this month but that blew up after House Republicans objected to higher taxes. According to congressional sources, Obama has apparently offered to forgo any tax increases in the initial deal, postponing an overhaul of the tax code until next year.
That was also the shape of the old deal, but with one significant exception: Obama had been pressing Republicans to extend the Bush-era tax cuts for middle-class households now, allowing the cuts that benefit the wealthiest households to expire next year. With that part of the bargain now off the table, the aides said, Democrats see no guarantee that Republicans will actually follow through with tax reform in the future.
Senate Democratic leaders warned the Republican-controlled House, meanwhile, that time is running out for a comprehensive deal that would include raising the federal debt limit. They urged the House to remain in session and to ignore “extreme right-wing ideologues” who reject compromise.
In a floor speech a day after the White House signaled that Obama would accept a short-term hike in the debt ceiling if it gave lawmakers time to finalize a comprehensive deal, Senate Majority Leader Harry M. Reid (D-Nev.) condemned the House GOP leadership for reversing course on a plan to remain in session through the weekend and instead take Saturday and Sunday off.
Reid said it would present a “a very bad picture” if House members leave town this weekend without a deal. He noted that under congressional rules, a bill that involves revenues would have to start in the House, meaning that a “grand bargain” like the one sought by Obama and Boehner could not begin moving through Congress until next week.
In separate floor remarks, Sen. Charles E. Schumer (N.Y.), the third-ranking Democrat in the Senate, asked whether the United States would allow itself “to be driven into default and financial calamity by a small group of extreme right-wing ideologues in the House GOP.”
Charging that House Republicans are “becoming increasingly isolated,” Schumer urged them to seize a “life line” thrown to them by Grover Norquist, president of Americans for Tax Reform, who was quoted in a Washington Post editorial Thursday as telling the paper’s editors that the elimination of a tax cut or special-interest tax break would not necessarily amount to a tax increase.
However, Norquist backed away from the reported remarks Thursday, saying his influential group would oppose any move to allow the 2001 and 2003 tax cuts by the George W. Bush administration to expire as currently scheduled. He asserted that expiration of the cuts would amount to a tax increase.