Obama Seeks Grand Bargain on Deficit
President Barack Obama pauses during a news conference in the Brady Press Briefing Room at the White House in Washington, D.C., on July 11, 2011. Photographer: Joshua Roberts/Bloomberg
July 12 (Bloomberg) -- Al Hunt, executive editor at Bloomberg News, discusses President Barack Obama's comments on U.S. debt-reduction talks. More negotiations are scheduled between Obama and congressional leaders at the White House this afternoon. Hunt speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)
July 12 (Bloomberg) -- Senator Jeff Sessions of Alabama, the senior Republican on the Senate Budget Committee, talks about the prospects for a compromise agreement on reducing deficits and raising the $14.3 trillion federal debt ceiling before the government exhausts its borrowing authority on Aug. 2. He speaks with Megan Hughes on Bloomberg Television's "In the Loop." (Source: Bloomberg)
July 12 (Bloomberg) -- Timothy Bitsberger, managing director at BNP Paribas and a former assistant secretary for financial markets at the U.S. Treasury, talks about the outlook for bipartisan U.S. deficit-reduction negotiations and the impact on Treasuries. Bitsberger speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
July 12 (Bloomberg) -- Tad DeHaven, a budget analyst at the Cato Institute, talks about U.S. budget talks and the need to cut spending to reduce the deficit. DeHaven speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
July 11 (Bloomberg) -- Brian Gardner, senior vice president for Washington research at Keefe Bruyette & Woods Inc., discusses prospects for political compromise on reducing the U.S. federal deficit and raising the debt ceiling. Gardner speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
July 11 (Bloomberg) -- U.S. Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, talks about the negotiations between President Barack Obama and congressional leaders on reducing the government deficit and raising the debt limit. Van Hollen speaks on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)
July 11 (Bloomberg) -- Mortimer Zuckerman, chief executive officer of Boston Properties Inc., discusses President Barack Obama's role in federal deficit plan negotiations and the outlook for the U.S. economy. Zuckerman, speaking with Betty Liu on Bloomberg Television's "In the Loop," also talks about News Corp.'s Rupert Murdoch discontinuing his News of the World newspaper following a phone-hacking scandal. (Source: Bloomberg)
July 11 (Bloomberg) -- Douglas Holtz-Eakin, president of the American Action Forum and a former director of the Congressional Budget Office, and Maya MacGuineas, president of the Committee for a Responsible Federal Budget, talk about the U.S. debt ceiling and budget policy. They speak with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
July 12 (Bloomberg) -- David Walker, chief executive officer of Comeback America Initiative and a former U.S. comptroller general, talks about the outlook for political compromise on reducing the federal deficit and raising the debt ceiling. Walker, speaking with Betty Liu and Lizzie O'Leary on Bloomberg Television's "In the Loop," also discusses Treasury Secretary Timothy Geithner's role in deficit negotiations. (Source: Bloomberg)
U.S. President Barack Obama, second right, meets with House Majority Leader Eric Cantor, a Republican from Virginia, left, House Minority Leader Nancy Pelosi, a Democrat from California, second left, House Speaker John Boehner, a Republican from Ohio, center, and Senate Majority Leader Harry Reid, a Democrat from Nevada, right, after a news conference in the Brady Press Briefing Room at the White House in Washington, D.C., U.S. Photographer: Alex Wong/Pool via Bloomberg
The top Senate Republican attacked the credibility of President Barack Obama’s efforts to forge a “grand bargain” of spending cuts and tax increases, saying the president himself was an obstacle to an agreement on the debt.
Senator Mitch McConnell and other Republican leaders said Obama is putting an expansion of government ahead of the goal of reaching a bipartisan accord to cut the U.S. deficit. He said Democrats’ “smoke and mirrors” proposals prevented the type of $4 trillion deficit reduction that Obama is seeking.
“As long as this president is in the Oval Office, a real solution is unattainable,” McConnell of Kentucky said on the Senate floor today in his toughest comments about the negotiations since bipartisan talks began.
Obama has pressed Republican leaders to seek bigger deficit savings than the range between $2 trillion and $2.5 trillion they have targeted and to compromise on their opposition to tax increases. The two parties are in talks aimed at raising the $14.3 trillion U.S. debt ceiling before Aug. 2, the date when the government is projected to exhaust its borrowing authority.
“Now is the time to deal with these issues,” Obama said at a White House news conference yesterday. “If not now, when?”
The parties are divided over taxes and entitlement programs. In addition to rebuffing Democratic calls for more tax revenue, Republicans are pushing to cut programs such as Medicare and Social Security. The White House has indicated a willingness to consider savings including an increase in the Medicare-eligibility age as part of a larger deal.
‘Something Big’
“I was one of those who had long hoped we could do something big for the country,” McConnell said. “But in my view the president has presented us with three choices: smoke and mirrors, tax hikes, or default. Republicans choose none of the above.”
McConnell’s criticism was echoed by House Speaker John Boehner, an Ohio Republican, who said the “president talks a good game, but when it comes to actually putting these issues on the table and making decisions, he can’t quite pull the trigger.”
McConnell held a private meeting with Senate Republicans to get their views on the negotiations at the White House scheduled to resume at 3:45 p.m. today.
In yesterday’s negotiating session, Obama rejected a Republican presentation on spending cuts discussed in earlier talks led by Vice President Joe Biden, a Democratic official said. Obama said the total -- which a Democratic official put at $1.7 trillion -- fell short of his goal and the threshold Republicans set for a debt-limit increase large enough to carry the nation through the 2012 elections, another Democrat said.
Letter From Chamber
The U.S. Chamber of Commerce, the Business Roundtable and other organizations today released a letter to Obama and Congress urging action “to raise the debt ceiling as expeditiously as possible.”
The letter, which the chamber said was signed by 470 chief executives, supports long-term efforts to reduce federal deficits while saying that failure to increase the government’s borrowing authority “would create uncertainty and fear, and threaten the credit rating of the United States.”
House Democrats met this morning to review the bigger deal that Obama is offering to Republicans even as aides said the Medicare and Social Security compromises Obama has been willing to consider are largely moot given that Republicans refusal to engage on revenue. Democrats said the debt negotiations have become so strained, it may take Wall Street and business groups stepping in with a warning to force an agreement.
‘Impending Danger’
“We certainly would hope that the Chamber of Commerce would step up,” said House Democratic Caucus Chairman John Larson of Connecticut. “We have heard from Wall Street but I think they have to be more vociferous and more present in terms of the looming, impending danger.”
U.S. stocks were little changed, after the biggest two-day drop since March for the Standard & Poor’s 500 Index. The S&P index dropped 0.1 percent to 1,318.70 at 10:49 a.m. in New York. The Dow lost 5.18 points, or less than 0.1 percent, to 12,500.58.
Yields on benchmark Treasury 10-year notes were little changed after surging earlier as concern that Europe’s debt crisis may spread stoked demand for the U.S. government debt’s safety. The 10-year note yield fell as much as 11 basis points to 2.81 percent, the lowest since Dec. 1, before trading little changed at 2.91 percent, at 11:30 a.m. in New York, Bloomberg Bond Trader prices show.
Deal This Week?
U.S. Treasury Secretary Timothy F. Geithner said the Obama administration is aiming to reach a deal on raising the debt ceiling as soon as this week.
“We want to wrap up the broad outlines of this agreement by the end of this week, certainly by the end of next week,” Geithner said today at a symposium in Washington.
Republicans have demanded at least a dollar in spending cuts over 10 years for every dollar they agree to raise the debt limit, which would have to go up more than $2 trillion to get through the elections. The Republicans last weekend lowered their objective for deficit reduction to the range of $2 trillion to $2.5 trillion.
Democratic congressional leaders also objected to the figure presented yesterday by Republicans, saying spending cuts that had been discussed in the Biden-led talks were contingent on tax-revenue increases, said a Democratic official.
Obama, Boehner
Three Republican aides said that at one point in the 90- minute talks Obama and Boehner sparred over the price that Republican House members would pay to reach a deficit deal, with the speaker arguing that supporting entitlement cuts was just as risky for his party. When Obama reminded him that Republicans already voted to cut Medicare spending earlier this year, Boehner retorted that his party was the one showing leadership.
Before yesterday’s negotiating session began, Obama argued at his news conference that negotiators should pursue his $4 trillion goal in deficit reduction, which would require both entitlement cuts and revenue increases. He said he wouldn’t agree to a short-term extension of the debt limit.
“I will not sign a 30-day or a 60-day or a 90-day extension -- that is just not an acceptable approach,” Obama told reporters.
As the elections get closer, partisan differences will only grow harder to resolve, he said. “We might as well do it now -- pull off the Band-Aid, eat our peas.”
‘Bent Over Backwards’
Obama called on Republican leaders to show flexibility, saying he has “bent over backwards” to accommodate them in deficit talks.
“I don’t see a path to a deal if they don’t budge. Period,” Obama said.
He chided Republican leaders for focusing on a smaller package of cuts, saying that posture doesn’t square with their rhetoric that casts debt reduction as “a moral imperative.”
House Majority Leader Eric Cantor said Republicans “didn’t come here to raise taxes” after Obama challenged the party to compromise on a deficit plan. Any deal “has got to be revenue- neutral,” he said, meaning that it would not result in higher income for the government.
A Republican congressional aide said one purpose the party’s leaders had in the negotiating session was to gauge Democrats’ willingness to go through with spending cuts discussed during the Biden talks if tax revenue increases were removed from the table.
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