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Debt talks yield little; Obama rules out stopgap

Debt talks yield little; Obama rules out stopgap

President Barack Obama and congressional leaders remained far apart Monday on how to slash the nation's debt, with reality sinking in that even a middle-ground proposal to avert a calamitous first-ever U.S. debt default, would not get through Congress.
As time runs perilously short for action, Obama challenged top lawmakers to return to the White House on Tuesday with fresh ideas for a debt-reduction plan that could pass the House and Senate.
"We are going to get this done," Obama insisted in a news conference.
Not only the strength of the U.S. economy at stake, but also the political fortunes of Obama himself _ as well as lawmakers _ heading into next year's presidential and congressional elections.
Both Democratic and Republican leaders agree the U.S. shouldn't be allowed to default on its obligations, which could skyrocket interest rates, send stock markets plunging and shatter faith in the world's No. 1 economy. However, a deal has been thwarted by conservatives opposed to any tax increases and liberal Democrats opposed to cuts in Medicare and Social Security.
At issue is the government's ability to borrow more to pay existing debt obligations and to run certain day-to-day operations. The U.S. blew past the existing $14.3 trillion borrowing limit on May 16. The Treasury Department has used accounting footwork to keep accounts in the black, but says the government could begin defaulting on its obligations if the debt ceiling isn't increased by Aug. 2.
Turning up the pressure, Obama declared that he would reject any stopgap extension of the nation's borrowing limit, imploring lawmakers once again to reach one of the most sizable debt-reduction deals in years.
Yet the path to an agreement remained hard to see.
In a 90-minute closed meeting, House Majority Leader Eric Cantor spelled out potential spending cuts that had been identified in talks led for weeks by Vice President Joe Biden. But Democratic lawmakers in the room made clear such a cutting-only approach without tax hikes on wealthier Americans would never pass the Democratic-led Senate or the House, where Democratic votes would be needed, too.
It did not appear, either, that such a plan would meet the House Republicans' own standard of a debt-cutting package. They want cuts that would exceed the size of the increase in the debt limit, which could be about $2.4 trillion to get the country through 2012 and next year's elections.
Republicans won't support a package that raises any taxes.
Democratic officials familiar with the White House position in the private talks insist that leaders of the House and Senate will not let that happen, and that Republicans ultimately would vote to raise the debt limit even if a deficit-cutting package does not come together in time.
Yet Republicans say otherwise. House Speaker John Boehner insists the House can't pass such a bill.
"I agree with the president that the national debt limit must be raised, and I'm glad that he made the case for it today," Boehner told reporters. "But the American people will not accept - and the House cannot pass - a bill that raises taxes on job creators."
Obama renewed his case for a package that would put a historic dent in the country's deficits by blending politically poisonous elements for both parties: tax hikes for the wealthy and big corporations opposed by Republicans and social service cuts that Democrats decry
He implored both political parties to give ground and show the American people that Washington can actually work.
Obama told reporters he would meet with the lawmakers every day until an agreement is reached. They have two weeks or less to do so in order to get any deal through Congress in time.
"It's not going to get easier; it's going to get harder," Obama said. "So we might as well do it now. Pull off the Band-Aid. Eat our peas."
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Associated Press writers Ben Feller and Andrew Taylor, Ricardo Alonso-Zaldivar, Erica Werner, Julie Pace contributed to this story.


Updated : 2021-04-21 14:27 GMT+08:00