July 14, 2024

Still ‘Far Apart’ on Debt, 2 Sides Will Seek Broader Cuts

Though the president and Congressional leaders did not close wide gaps on the issues of spending cuts or new tax revenues, officials briefed on the talks said, they emerged with a consensus to aim for the biggest possible deal — one resulting in up to $4 trillion in savings — and a recognition of the dire consequences of not acting before Aug. 2, when the government will lose its authority to borrow.

Treasury Secretary Timothy F. Geithner gave a stark description of the upheaval he said would reverberate through financial markets and the broader American economy if the government were to go into default, these officials said. The eight lawmakers from both parties listened somberly, officials said, and pledged to avoid such an outcome.

“Everyone acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure America does not default for the first time on its obligations,” Mr. Obama said to reporters after the meeting. “And everybody acknowledged that there’s going to be pain involved politically on all sides.”

Democrats and Republicans are confronting not only tough choices about how to balance spending cuts and higher taxes, but how best to sell such a package, which would probably challenge basic philosophical tenets of each party, to their rank-and-file members.

Declaring that the meeting had been “very constructive,” Mr. Obama said that White House and Congressional staff members would negotiate through the weekend and that the leaders would reconvene at the White House on Sunday. At that point, he said, he hopes “the parties will at least know where each other’s bottom lines are” and try to conclude a deal within two weeks.

Later, top lawmakers and Congressional officials said that they thought a narrow opening existed for a far-reaching agreement, and that the next 48 hours and the Sunday meeting would prove pivotal. If an acceptable package cannot be agreed upon, they predicted a fallback plan in the range of $2 trillion or more, based on the earlier negotiations overseen by Vice President Joseph R. Biden Jr.

With the White House and the lawmakers promising not to divulge details of the talks, the specifics of an eventual deal were not yet clear. But Mr. Obama has put popular entitlement programs like Medicare and Social Security on the table, while Speaker John A. Boehner has signaled for the first time his openness to up to $1 trillion in new revenues. The money could presumably be raised through closing loopholes but would also probably require changes to the tax code that would have to be worked out later.

The prospect of cuts in health care benefits and Social Security has alarmed Democrats. On Thursday, Representative Nancy Pelosi, the House Democratic leader, said she wanted to give the president room to negotiate a broad agreement but would resist efforts to tie the deal to Social Security.

“Do not consider Social Security a piggy bank for giving tax cuts to the wealthiest people in our country,” Ms. Pelosi said to reporters on Capitol Hill after the meeting. “We are not going to balance the budget on the backs of America’s seniors, women and people with disabilities.”

Mr. Obama plans to meet privately with Ms. Pelosi on Friday, suggesting that the White House is now turning its attention to soothing Democrats after the president held a secret meeting with Mr. Boehner last Sunday. That session advanced the talks and laid the groundwork for Thursday’s session, but left some Democrats complaining that they were being excluded from the process.

“The big question everyone is asking is, ‘What are we getting?’ ” said Representative Edward J. Markey, Democrat of Massachusetts.

The White House took pains on Thursday to play down reports that Mr. Obama was open to substantial cuts in Social Security benefits as part of a deficit-reduction deal. The press secretary, Jay Carney, said that the president had vowed in his State of the Union address in January to put Social Security on a firmer footing, and that he would not place the subject off limits in negotiations to reduce the deficit.

But Mr. Carney insisted that the president had not changed his approach to Social Security, saying Mr. Obama would consider only changes to the system that “would not slash benefits.”

Article source: http://feeds.nytimes.com/click.phdo?i=74be49caf5f3ddd22232f34e0953cfdf

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