From the many proffered interviews and statements swirling around today, here's my very succinct diagnosis of the situation: President Obama has professed a willingness to discuss the as-yet largest proposed debt ceiling/budget deal, which would (ostensibly) cut the deficit by $4 trillion over a period of a decade. Entitlement reform could be considered as a part of that deal, but the Democrats insisted that tax hikes would be a part of it, at which Speaker Boehner balked. The Speaker now wants to pursue a smaller deficit-reduction package that would be void of tax hikes.
Senate Minority Leader Mitch McConnell backed Boehner up, telling Fox News Sunday earlier today that, as far as Republicans are concerned, the larger tax-hike-inclusive deal is off the table: "Well, I think it is because everything they told me and the Speaker is that to get a big package would require a big tax increases in the middle of economic situation. That's extraordinarily difficult with 9.2% unemployment. We think it's a terrible idea. It's a job killer.”
Meanwhile, Treasury Secretary Geithner appeared on NBC's Meet the Press to make clear that "the U.S. is not going to default." Geithner informed viewers that the President is still committed to pursuing the largest deal possible, one that will include tax hikes. From the WSJ:
If lawmakers and the Obama administration don't agree on a compromise budget package that includes raising the $14.29 trillion borrowing limit before Aug. 2, Treasury says the government could begin defaulting on its obligations.
Late last week, Republican Speaker of the House John Boehner said he would no longer pursue a $4 trillion deficit-reduction deal proposed by the White House. Rather, Republicans now want a smaller deal, which would reduce the deficit by between $2 trillion to $2.5 trillion over 10 years, and consists largely of spending cuts.
Geithner said on Meet the Press, however, President Barack Obama will push for "the biggest, most substantial deal possible. The deal that's going to be best for the economy." He said even getting a smaller deal, such as the one proposed by the GOP, is "very tough too because it requires very difficult reforms, savings, cuts and things people depend on that matter."
Repeatedly pressed on the news program if the administration was open to cutting entitlements such as Medicare, Medicaid and Social Security, Geithner said Obama was "standing tough," against such measures.
Republicans have said the White House is backpedaling on whether it would consider reducing the size of entitlements.
Still, Geithner said, Obama's "willing to do very, very difficult political things" to cut costs, "even Medicare and Medicaid."
Geithner also said that "it's a very tough economy," and that, for a lot of people, "it's going to feel very hard, harder than anything they've experienced in their lifetime now, for a long time to come." Gee, isn't that just grand.
The next big budget meeting is scheduled for around 6:00 PM this evening - stay tuned for updates.
Addendum: A pithy summary of the situation from James Pethokoukis at Reuters, well worth the read - will we one day look back on this crisis and realize Boehner was channeling Ronald Reagan on this one? Let's hope.
So in the end, it was bit of a Ronald Reagan moment for John Boehner on Saturday. Just as the U.S. president walked away from a bad arms control agreement with Soviet leader Mikhail Gorbachev at Reykjavik, Iceland in 1986, the House speaker passed on President Barack Obama’s mega-debt reduction deal in Washington.
In both case, the asking price was just too high. For Reagan, it was lethal limitations on his Strategic Defense Initiative. For Boehner, it was a trillion-dollar tax distraction from America’s true fiscal threat: spending run amok: “Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes.”
Update: This evening's budget meeting convened just after the President declared that "we need to" accomplish a definite debt ceiling deal within ten days, and clocked in at about eighty minutes. Predictably, of course, nothing definite has been agreed to, and Boehner and the Republicans are standing firm on not raising taxes. The negotiations will continue with more meetings tomorrow (and tomorrow, and tomorrow, creep[ing] in this petty pace from day to day... appropriate allusion, no?).
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