The fifth day of negotiations between congressional caucuses and the White House ended with no movement toward increasing the debt ceiling or reigning in the national deficit. The session on Wednesday, July 13, ended with President Barack Obama leaving the table after two hours of talks, led by House Majority Leader Eric Cantor who leads the Tea Party base and who has steadfastly refused to increase revenue by ending the Bush Tax cuts for the very rich or closing lucrative tax loopholes. Cantor supports a short-term extension of the debt-ceiling proposed by Sen. Mitchell McConnell (R-Ky). The McConnell proposal will make the president the sole decision maker for such actions and, some speculate, the ‘”fall guy.”
“Given a choice between a bad deal and avoiding default, I choose to avoid default,” McConnell said in an interview with Mandy Connell of WHAS radio yesterday, adding that “if we were to go into default … the practical effect of that will be to allow the president to make us co-owners of a bad economy.”
According to Democratic sources familiar with the talks who spoke on condition of not being identified, President Obama told the group at the table that the political wrangling confirmed what the public considers to be the worst of Washington. Multiple sources, also speaking on condition of anonymity, said Obama told the gathering that “this could bring my presidency down,” referring to his pledge to veto any short-term extension of the debt ceiling. Sources say he vowed, “I will not yield on this.”
Obama administration officials have warned repeatedly that a failure to raise the current $14.3 trillion debt ceiling by Aug. 2 could trigger a partial default. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things. The seriousness of the situation was reinforced when Moody’s, a major rating agency, said yesterday that it would put the sterling bond rating of the United States on review for possible downgrade.
According to CNN, the heart of Obama’s call for more tax revenue would be allowing tax cuts from the Bush presidency to expire at the end of 2012 for families making more than $250,000. His plan would keep the lower tax rates for Americans who earn less.
Obama noted earlier this week he is not looking to raise any taxes until 2013 or later. He claimed he has “bent over backward to work with the Republicans” and not force them to vote on any revenue hikes in the short term, a politically toxic move for the GOP’s conservative base. –a. robinson
