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WASHINGTON (AP) — The Senate on Friday firmly rejected a House
Republican bill to slash spending and require a balanced-budget
amendment, leaving unresolved with just days to go the urgent issue
of increasing the nation’s borrowing powers.
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The 51-46 Senate vote against the tea party-backed measure – which
had been expected in the Democratic-run chamber – came shortly
after House Speaker John Boehner told reporters he and President
Barack Obama had failed to reach a separate agreement to resolve
the debt crisis.
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“There was no agreement, publicly, privately, never an agreement,
and frankly not close to an agreement,” Boehner said. “So I suggest
it’s going to be a hot weekend here in Washington, D.C.”
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If progress is to be made over the weekend in the nation’s steamy
capital, it will have to be made behind closed doors and not in the
open.
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Senate Majority Leader Harry Reid, D-Nev., canceled planned weekend
Senate sessions, increasing the pressure on Obama, Boehner and
other top-level negotiators to strike a deal.
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Reid said that talks ongoing between Obama and Boehner are focused
on producing legislation involving taxes and that the House would
have to act before the Senate, because tax measures must originate
in the House.
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Boehner underscored his willingness to keep negotiations going,
telling reporters, “As a responsible leader, I think it is my job
to keep likes of communications open.”
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The administration says the government is in danger of defaulting
for the first time in its history after August 2 unless Congress
raises the federal debt ceiling so it can keep borrowing enough to
pay its bills.
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But Democrats and Republicans have been deadlocked over terms of a
deficit-reduction package linked to the debt-limit increase, with
Democrats demanding some tax increases and Republicans insisting on
doing it just with spending cuts.
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The focus now is on efforts by Obama and Boehner to come up with an
ambitious $4 trillion “grand bargain” that would secure the support
of rank-and-file lawmakers. But wide differences still
remain.
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The continuing Obama-Boehner talks kept alive the possibility of
substantial deficit reduction that would combine cuts in spending
on major benefit programs like Medicare and Medicaid and revenue
increases through a broad overhaul of the tax code.
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“We have the opportunity to do something big and meaningful,” Obama
declared in a newspaper opinion piece. Later Friday, the president
took his case to the public again in a town hall-style meeting.
Earlier, from the Capitol, Boehner said House Republicans were
prepared to compromise and prodded Obama: “The ball continues to be
in the president’s court.”
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Even as Republicans contended with the demands of tea party-backed
House members, worry was shifting to how to keep Democrats in line
if a compromise is reached between Boehner and Obama.
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Talk of a deal prompted a spasm of distress among Senate Democrats
worried that Obama would agree to immediate cuts but put off steps
to increase tax revenues that the president has said are key to any
agreement. The White House immediately sought to tamp down talk of
an impending deal.
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Democratic officials familiar with the talks said both the cuts to
benefit programs such as Medicare and a tax overhaul are too
complicated to undertake quickly and would have to wait up to a
year to negotiate. The officials, however, said any agreement would
have to have strict requirements that would guarantee Congress had
to act.
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First, however, the Democratic-controlled Senate on Friday
dispensed with the House-passed measure that would raise the debt
limit by $2.4 trillion on the condition that Congress sends a
constitutional balanced budget amendment to the states for
ratification and approves trillions in long-term spending
cuts.
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That left bargaining for a bipartisan compromise as the only
alternative. Negotiations were proceeding on multiple fronts as
officials searched for the clearest path to avoid a potentially
devastating default. Each path faced sizable hurdles.
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One short-term plan under discussion by some House Republicans
would cut spending by $1 trillion or more immediately and raise the
debt ceiling by a similar amount, permitting the government to
borrow into early 2012. But Obama has insisted on an increase that
lasts into 2013, past next year’s elections. That would require
raising the debt ceiling by about $2.4 trillion.
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White House spokesman Jay Carney said Thursday that Obama remains
“unalterably opposed” to debt limit extensions in the order of six
months, nine months or one year. “His premise is that we have to
raise the debt ceiling for an extended period of time into 2013
regardless,” Carney said.
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Another plan under discussion by Reid and Senate Minority Leader
Mitch McConnell, R-Ky., would guarantee that the president would
get a debt ceiling increase through 2012. It would extract a
political price from Obama, who would have to ask Congress for
three separate increments, and it would allow Republicans to avoid
casting a difficult vote in favor of the debt ceiling that would
anger their constituents. Many House Republicans, however, were
dismissive of the proposal because it did not guarantee deficit
reductions.
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Then there are the efforts by Obama and Boehner to close gaps on a
deal to reduce deficits by about $4 trillion.
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Democratic officials familiar with the discussions said both sides
remained apart on key components of the deal, including the amount
of revenue that a revamped tax code could yield, the nature of the
changes to Medicare and Medicaid, and the process that would
guarantee that both taxes and benefit programs would in fact be
overhauled.
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Republicans have insisted that entitlement programs such as
Medicare need substantial changes, but have loudly objected to any
revenue provision that could be deemed a tax increase. Democrats,
eager to keep changes to their cherished health care programs to a
minimum, have demanded that any plan must have new tax
revenue.
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Democrats in the Senate reacted angrily when word spread that Obama
and the House leaders appeared to be closing in on a deal that
would include $3 trillion in spending cuts but only a promise of
higher revenues to be realized through a comprehensive overhaul of
the tax code.
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White House officials went out of their way to deny that a deal was
near. By day’s end Obama had asked the top four Democrats in the
House and Senate to go to the White House to discuss the status of
the talks. The meeting lasted one hour and 45 minutes.
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In his opinion piece in USA Today, Obama said he was still
insisting on tax revenue being part of the deal. Democratic
officials said that Obama was not demanding that specific tax
provisions, such as restrictions on tax subsidies or closing
loopholes, be agreed upon immediately, but that they could be part
of a broader tax overhaul that Congress would have to
undertake.
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House Minority Leader Nancy Pelosi, D-Calif., left the door open to
such an approach to tax changes. “I’d like to see it have a revenue
piece so we have tax fairness, whether immediately or something
that’s part of an extended plan to it,” she said
Thursday.
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The Democratic officials said the negotiations focus on immediate
cuts to day-to-day operations of government that are financed at
Congress’ discretion. The legislative work to cut entitlement
programs such as Medicare and Medicaid and to overhaul the tax
system would have to be carried out over the next six month to a
year, the officials said.
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One key sticking point, they said, was how to force Congress to
address entitlement and tax changes to achieve the desired deficit
reduction. Under discussion were mechanisms that would trigger
onerous tax and spending consequences if Congress tried to wiggle
out.
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—–
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Associated Press writers David Espo, Ben Feller and Alan Fram
contributed to this report.
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