Debt talks crisis: Boehner, Obama trade blame

WASHINGTON - House Speaker John Boehner abruptly broke off talks with President Barack Obama Friday night on a deal to make major cuts in federal spending and avert a threatened government default, sending already uncertain compromise efforts into instant crisis.

Within minutes, an obviously peeved Obama virtually ordered congressional leaders to the White House Saturday morning for fresh negotiations on raising the nation's debt limit. "We've got to get it done. It is not an option not to do it," he declared.

For the first time since talks began, he declined to offer assurances, when asked, that default would be avoided. Moments later, however, he said he was confident of that outcome.

At a rebuttal news conference of his own a short while later in the Capitol, Boehner said, "I want to be entirely clear, no one wants default on the full faith and credit of the United States government, and I'm convinced that we will not."

The two men offered sharply different accounts of the compromise efforts so far and who was at fault for the collapse.

"I've been left at the altar now a couple of times," Obama said wryly.

"It's the president who walked away from his agreement," Boehner contended.

The speaker said Obama wanted higher taxes and not enough spending cuts.

The president countered that he had offered an "extraordinarily fair deal" that totaled $2.6 trillion in spending cuts and $1.2 trillion in additional revenue.

Strikingly, the two sides had agreed on two highly controversial changes, according to aides on both sides of the talks. One would raise the age of eligibility of Medicare gradually from 65 to 67 for future beneficiaries, while the other would slow the increase in cost-of-living raises in Social Security checks.

Given that accord, it seemed likely those agreements would be among many carrying over to the broader meeting Saturday morning and beyond.

Barring action by Congress by an Aug. 2 deadline, the Treasury will be unable to pay all its bills. Officials say a default could destabilize the already weakened U.S. economy and send major ripple effects across the globe.

Even by the recent standards of divided government, Boehner's decision triggered an extraordinary evening in which first the Democratic president and then the Republican speaker maneuvered for political position on an issue of enormous national import.

Unspoken, yet unmistakable in all the brinkmanship was the 2012 election campaign, still 18 months away, with the White House and both houses of Congress at stake.

In a letter circulated earlier to the House Republican rank and file, Boehner said he had withdrawn from the talks because the president wanted to raise taxes and was reluctant to agree to cuts in benefit programs.

The disconnect was "not because of different personalities but because of different visions for our country," he said, and he announced he would now seek agreement with the Democratic-controlled Senate.

Obama was having none of that, announcing instead a morning White House meeting where he said he expected to hear proposed solutions from the top leaders of both parties in both houses.

"One of the questions the Republican Party is going to have to ask itself is, `Can they say yes to anything?"' Obama said.

The president avoided direct criticism of Boehner, although he did mention that his phone calls to the speaker had gone unreturned during the day. Administration officials said the president had tried to reach Boehner twice over two days. Asked about the spurned calls, Boehner said he didn't think his relationship with Obama had been "irreparably damaged."

He said he would attend the Saturday meeting at the White House.

Private, sometimes-secret negotiations had veered uncertainly for weeks, generating reports as late as Thursday that the two sides were possibly closing in on an agreement to cut $3 trillion in spending and add as much as $1 trillion in possible revenue while increasing the government's borrowing authority of $2.4 trillion.

That triggered a revolt among Democrats who expressed fears the president was giving away too much in terms of cuts to Medicare and Social Security while getting too little by way of additional revenues

"Failing to raise the debt ceiling would do irreparable harm to our credit standing, would undermine our ability to lead on global economic issues and would damage our economy," former Treasury Secretary Henry Paulson, a Republican, told reporters during the day.

Current administration officials and Federal Reserve Chairman Ben Bernanke have said much the same thing for weeks - while gridlock persisted in Congress. Bernanke met with Treasury Secretary Tim Geithner during the day to discuss "to discuss the implications for the U.S. economy if Congress fails to act."

Obama said his only requirement for an agreement was legislation that provides the Treasury enough borrowing authority to tide the government over through the 2012 election.

Senate Majority Leader Harry Reid, D-Nev., agreed in a written statement, saying a shorter-term extension was unacceptable.

His counterpart, Senate Republican leader Mitch McConnell supported Boehner for "insisting on reducing spending and opposing the president's call for higher taxes on American families and job creators."

Not for the first time, he said, "it's time now for the debate to move out of a room in the White House and onto the House and Senate floors."

The two Senate leaders will be among the lawmakers at the White House meeting called by the president, presumably joined by Boehner and Rep. Nancy Pelosi, the House Democratic leader.

At the same time Obama and Boehner sought to define the clash to their political advantage, their aides provided details of the abortive talks.

Republican aides said Obama has upped his demand for higher taxes during the week, in the wake of a proposal by the bipartisan "Gang of Six" in the Senate. The group called for an overhaul of the tax code that would increase revenue by $1.2 trillion over a decade.

Additionally, the aides said the two sides were not able to bridge their differences over the triggers designed to force Congress to enact both tax reform and cuts to Medicare and other benefit programs by early next year.

Yet aides on both sides said the negotiations had yielded agreement for cuts of $250 billion from Medicare. Obama said Medicare, Medicaid and Social Security combined would have accounted for $650 billion.

An additional $1 trillion or slightly more would come from hundreds or thousands of government programs that are funded annually. Assumed savings from the end of the wars in Iraq and Afghanistan totaled another $1 trillion.

The developments occurred hours after the Senate had rejected a House-passed bill that would have raised the debt limit in exchange for spending cuts of an estimated $6 trillion and a vote in Congress to send a constitutional balanced budget amendment to the states for ratification.

(Copyright 2011 by The Associated Press. All Rights Reserved)