A day after budget talks collapsed amid acrimony and finger-pointing, President Obama and congressional leaders meet this morning in search of a way to raise the $14.3 trillion debt ceiling while staving off a government default.
An angry Obama summoned the leaders Friday night, shortly after House Speaker John Boehner pulled out of month-long budget negotiations with the White House; the president said the Republicans walked away from a deal that would have cut the budget roughly $3 for every $1 in new tax revenue.
"We have run out of time," Obama said. "And they are going to have to explain to me how it is that we are going to avoid default."
Boehner said he broke off the White House talks because Obama insisted on raising taxes as part of a debt ceiling debt, including a last-minute request for $400 billion in new revenues. The speaker said he will now work with Senate leaders on a fallback agreement to raise the debt ceiling and avoid default.
"It's not in the best interests of our country to raise taxes during this difficult economy," Boehner said. "I'm confident that the bipartisan leaders here in the Congress can act. If the White House won't get serious, we will."
The White House meeting is at 11 a.m.
Leaders from both parties said they need to raise the $14.3 trillion by Aug. 2, a week from Tuesday. That's the day the Treasury Department says it loses borrowing authority needed to pay the nation's bills, risking default.
The potential effects of a default include higher interest rates on all loans, and a downgrade in the country's credit ratings, government officials have said. There is also the prospect of unamailed government checks ranging from Social Security payments to veterans benefits.
As Boehner works with the Senate on a new debt deal, they may well run into the same problem as the Boehner-Obama negotiations: Finding a deal that can pass both the Republican-run House and the Democratic-run Senate.
Boehner and other House Republicans say they will only raise the debt ceiling if Democrats agree to debt reduction of the same amount or more, at least some $2.5 trillion over ten years -- without raising taxes.
Obama and Democrats said reducing the $14 trillion-plus debt requires new tax revenues, and proposed eliminating tax breaks and loopholes for wealthy Americans such as oil company operators and private plane owners.
Democrats also said that proposed Republican budget cuts threaten such programs as Social Security and Medicare.
In blasting Boehner and the Republicans, Obama said Democrats were willing to cut $650 billion from Medicare, Medicaid, and Social Security, as well as other reductions that many Democrats had objected to. Overall, the agreement would have budget cuts of up to $3 trillion over ten years, with new tax revenues of up to $1.2 trillion.
"I was willing to take a lot of heat from my party," Obama said. "It is hard to understand why Speaker Boehner would walk away from this kind of deal."
Boehner said he had an agreement with the White House for $800 billion in revenue, but Obama added $400 billion at the last week."I'm confident that the bipartisan leaders here in the Congress can act," Boehner said. "If the White House won't get serious, we will."
Over the Senate, Republican leader Mitch McConnell and Democratic leader Harry Reid -- who will also be at today's White House meeting -- have been working on a complicated legislative deal that would basically allow Obama to raise the debt ceiling on his own, in exchange for about $1.5 trillion in budget cuts.
But there's some question as to whether a Reid-McConnell plan could pass the Republican House. They've been talking about budget cuts of some $1.5 trillion, less than the GOP has been seeking.