December 6, 2023

Boehner and Obama Nearing Deal on Cuts and Taxes

Congressional and administration officials said that the two men, who had abandoned earlier talks toward a deal when leaks provoked Republicans’ protests, were closing in on a package calling for as much as $3 trillion in savings from substantial spending cuts and future revenue produced by a tax code overhaul. If it could be sold to Congress, the plan could clear the way for a vote to increase the federal debt ceiling before an Aug. 2 deadline.

But the initial reaction to the still-unfinished proposal hardly suggested a quick resolution. This time, the flak came mostly from senior Congressional Democrats, who are angry at some of Mr. Obama’s concessions and at being excluded from the talks.

The president worked to ease concerns from members of his party, inviting Democratic leaders to a  White House meeting on Thursday evening that lasted nearly two hours. The participants would not comment afterward.

Mr. Obama and Mr. Boehner had maintained tight secrecy to prevent a recurrence of the Republican rebellion that stymied their effort earlier this month. With only a few top advisers involved, the news that they were nearing an accord broke only after administration officials told Democratic Congressional leaders on Wednesday night about the outlines of the Obama-Boehner discussion, following talks earlier in the day between the president, Mr. Boehner and Representative Eric Cantor of Virginia, the No. 2 House Republican.

Hours before the Congressional Democrats met with Mr. Obama, they had expressed alarm publicly to reporters that the emerging proposal seemed too reliant on deep spending cuts compared to new revenue. In private, some vented their criticism at Mr. Obama’s budget director, Jacob J. Lew, during a heated party lunch of Senate Democrats on Thursday.

“The president always talked about balance: there had to be some fairness in this, this can’t be all cuts,” said Senator Harry Reid, the Senate majority leader, as he left the meeting with Mr. Lew. “The caucus agrees with that. I hope the president agrees with that, and I’m confident he will.”

But the president and Mr. Boehner were moving ahead with their plan, aides said, trying to agree on matters like how much new revenue would be raised, how much would go to deficit reduction, how much to lower tax rates and, perhaps most critical, how to enforce the requirement for new tax revenue through painful consequences for both parties should they be unable to overhaul the tax code in 2012.

The White House wants a trigger that would raise taxes on the wealthy; Mr. Boehner wants the potential penalty for inaction to include repeal of the Obama health care law’s mandate that all individuals purchase health insurance after 2014.

 Officials on all sides of the tense negotiations warned that no firm deal to raise the nation’s $14.3 trillion borrowing ceiling was in hand, and tried to play down progress — if only to stave off attempts to change the deal’s shape or to kill it by hard-liners on both sides of the debate.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” said Kevin Smith, a spokesman for Mr. Boehner.

The White House also denied that any agreement was imminent. Jay Carney, the White House press secretary, said: “There is no deal. We are not close to a deal.”

The same issues that foiled earlier negotiations between Mr. Obama and Mr. Boehner remain. Many Republicans oppose abandoning the party’s no-compromise stand against any new taxes, while many Democrats fear a “grand bargain” will undercut their party’s ability in the 2012 campaigns to use Republicans’ support of deep cuts in Medicare, Medicaid and Social Security against them.

Congressional Democrats already are suggesting the potential Obama-Boehner deal is more tilted toward Republican priorities than a bipartisan plan suggested this week by the so-called Gang of Six senators, three Republicans and three Democrats.

House Republicans, too, expressed wariness. While initial reports suggested the emerging plan would appear to meet Republican demands for less reliance on new revenue than Democrats had insisted on, Republicans could be uneasy about accepting a deal tied to higher revenue through tax changes. “The trick on this has always been the tax issue,” one Republican said.

Alternative solutions in Congress appeared to be faltering as the Senate on Thursday took up and prepared to reject on Friday a conservative House Republican plan to slash spending by $5.5 trillion, deeper cuts than anything proposed before.

A backup plan being prepared in the Senate by Mr. Reid and his Republican counterpart, Mitch McConnell, the minority leader, was meeting stiff resistance from the House. That plan would allow a debt ceiling increase without the approval of Congress, in effect, but also without the guarantees of deep spending cuts that Republicans wanted in tandem.

Mr. Reid and Mr. McConnell summoned the Gang of Six — rather, the Gang of Eight with the addition of Senator Michael Bennet of Colorado, a Democrat, and Senator Mike Johanns, Republican of Nebraska — to a meeting on Thursday. Both party leaders were unhappy with the group’s re-emergence this week, and with Mr. Obama’s immediate warm words for the group, because it complicated their own efforts to reach a solution to the debt-limit impasse.

As Mr. Boehner called for some action to avert a default, he said Thursday that he was confident that many in the conservative House majority would ultimately be willing to accept some compromise.

 “At the end of the day, we have a responsibility to act,” Mr. Boehner told reporters. But he also made clear that he was not inclined to take any steps that could be considered a tax increase.

“I’ve never voted to raise taxes,” he said, “and I don’t intend to.”

As the capital markets continued to assess the possibility of American default on its debt, R. Bruce Josten, the executive vice president for government affairs of the U.S. Chamber of Commerce, wrote a blog post warning that such a potential default “has real, immediate, and potentially catastrophic consequences.”

Jennifer Steinhauer contributed reporting.

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