Obama: Deficit deal 'remains possible'
June 27th, 2011
02:09 PM ET

Obama: Deficit deal 'remains possible'

WASHINGTON (CNN) - President Barack Obama said after his meeting Monday with the Senate majority leader that they believe "a significant deal remains possible" on deficit reduction this year, White House press secretary Jay Carney told reporters.

Obama met with Sen. Harry Reid, D-Nevada, in the morning and was to later talk with Senate Minority Leader Mitch McConnell, R-Kentucky, to keep the negotiations going on a possible deficit reduction deal.

The sessions come after talks led by Vice President Joe Biden concluded last week without an agreement and as congressional leaders hardened their positions, making a possible compromise more difficult.

With an August 2 deadline looming to increase the federal debt ceiling or face possible default on debt obligations, pressure is mounting to reach a deal that will prevent market jitters and corresponding harm to the still-recovering economy.

"If everyone is willing to abandon the 'my way or the highway approach' ... we can get a significant deal this year," Carney said.

He made clear that the question of raising tax revenue, which Democrats support and Republicans oppose, is a major stumbling block. Carney also said that cutting both discretionary government spending and military spending is necessary, calling on Republicans to take on a "sacred cow" by backing defense reductions.

Carney's comments indicated that the scope and breadth of the agreement also is an issue. McConnell has indicated that a smaller agreement is possible for now that would cause Republicans to back a short-term increase in the federal debt ceiling.

On Sunday talk shows, legislators confirmed that the main impasse involves the tax revenue issue.

Specifically, Democrats seek a broad approach that makes some spending cuts but also ends tax breaks to bring in more revenue.

"You cannot achieve what you set out to do if you say it's just about cutting. It has to be about increasing the revenue stream as well," House Minority Leader Nancy Pelosi, D-California, told CNN's "State of theUnion."

Taking aim at GOP leaders, Pelosi noted that Republicans insisted during the eight years of the previous administration that tax cuts would produce jobs.

"They didn't," Pelosi said. "They produced a deficit."

Republicans counter that any increased tax burden will further slow economic recovery. They insist the government collects enough revenue but spends too much on excessive or unnecessary programs, as well as economically unfeasible entitlement programs such as Medicare and Social Security.

To McConnell, the question is one of political reality - Republicans control the House and a strong minority in the Senate, and they oppose any tax hike.

"Throwing more tax revenue into the mix is simply not going to produce a desirable result, and it won't pass," McConnell told the ABC program "This Week." "I mean, putting aside the fact that Republicans don't like to raise taxes, Democrats don't like to either."

Another conservative, Arizona Sen. Jon Kyl, told "Fox News Sunday" that Republicans want to change the tax code in an effort to lower rates, eliminate loopholes and possibly increase revenue, but not as part of the deficit reduction deal being negotiated now.

"What we've said is we're perfectly willing to consider those kinds of issues in the context of tax reform, which we would very much like to do," Kyl said. "But we're not going to have the time to do it or be able to do it in order just to raise revenue as part of the exercise, which should be about reducing spending."

At the heart of the GOP resistance is a bedrock principle pushed by anti-tax crusader Grover Norquist against any kind of tax increase at all. A pledge pushed by Norquist's group, Americans for Tax Reform, against any tax increases has been signed by more than 230 House members and 40 senators, almost all Republicans.

Norquist and his supporters want to shrink the federal government and believe any new revenue will enable continued government growth.

However, some Republicans, including conservative Sens. Tom Coburn of Oklahoma and Lindsey Graham ofSouth Carolina, have expressed support for increased tax revenue as part of a deficit reduction deal, and the Senate recently supported ending ethanol subsidies - which would increase revenue.

To Rep. James Clyburn, D-South Carolina, eliminating tax loopholes that benefit the wealthy and other steps to boost revenue are logical ways to help attack the deficit problem and make the tax system more fair.

"Now, the question is, how do you define a tax increase?" Clyburn said on ABC. "And I don't know of anybody who will define a tax increase as closing the loophole. If you tell me that my tax rate is going to be 30 or 35% and I come up with all kind of gimmicks with pretty smart lawyers and only pay 9%, there's something wrong with the loopholes in the law. We want to close those loopholes up. We do not want to raise anybody's tax rates."

Loopholes targeted by Democrats include oil and gas subsidies, as well as some write-offs for people earning more than $500,000 a year. In addition, Democrats call for ending Bush-era tax cuts for people earning more than $250,000 a year, which Republicans steadfastly reject.

Republicans are linking a deficit reduction deal to the separate need for Congress to raise the federal debt ceiling by August 2 or face possible default on some financial obligations.

To conservatives such as Sen. Jim DeMint, R-South Carolina, the debt ceiling must be accompanied by a combination of spending cuts, mandatory caps on future federal spending and a balanced budget amendment.

Otherwise, DeMint and other Tea Party favorites such as presidential candidate Rep. Michele Bachmann, R-Minnesota, say they will oppose increasing the debt ceiling by the $2.4 trillion requested by Obama to meet debt obligations through 2012.

Obama, Treasury Secretary Tim Geithner and economic analysts call such a stance dangerous, warning that market reaction to a potentialU.S.default on its obligations could stall or reverse the fragile economic recovery so far.

However, Bachmann called such warnings "scare tactics" on Sunday, telling the CBS program "Face the Nation" that the government takes in enough money to pay its debts while making spending cuts elsewhere, which conservatives want anyway.

"It would be very tough love," Bachmann conceded.

soundoff (16 Responses)
  1. Jay in NC

    The only deal we will accept is to cut spending. Liberals continue to push for new taxes, yet will not curb their own spending. This president has racked up a 4 trillion dollar debt in only 2 years. That is more than President Bush did in 8 years. We are $1.5 trillion per year in the hole, not counting the new entitlements with Barry-care. No more spending!

    June 27, 2011 at 2:17 pm |
    • Laura

      That is more than all prior presidents in our history combined!

      June 28, 2011 at 11:02 am |
    • jean2009

      Raise the tax code rates back the Clinton era percentages.
      Paying for those tax breaks any way you slice it or dice it is spending, and by eliminating welfare for the rich we could cut the National Debt by 50% by 2020.

      Obama – Biden 2012

      June 28, 2011 at 12:08 pm |
      • John

        You do understand the last quarter of the Clinton administration the US was falling into a recession. Isn't it something that this is most likely the first you have heard of this, and all we hear of is the "surplus left by Clinton", and the fact that no people from the Bush Administration blamed Clinton? It sure is quite different now...

        June 29, 2011 at 7:46 am |
  2. John

    The Republicans know the American people sent a message in the last election – cut spending or else you are out of a job. The Dems like to ignore this or simply say the election was about (fill in the blank). The message can't be any clearer. The Dems say "comprimise", but there is really no comprimise to be made. Dems would say there is nothing to cut in a budget that was raised 4 billion over the last two plus years. It is time for real change and the Dems don't like it.

    June 27, 2011 at 2:44 pm |
  3. maikl

    Now is a change. Doc. shoppers. Obama in panic and don't now what to do.

    June 27, 2011 at 4:52 pm |
    • jean2009

      We do not need a VAT.

      June 28, 2011 at 7:51 pm |
  4. Kirk Layman

    The Congress is like a small child when it comes to spending our tax dollars. They spend like they don't understand the concept of the value of a dollar. Until they treat each dollar spent like it were their own, raising taxes is not justifiable.

    June 28, 2011 at 9:21 am |
  5. Larry of Boston

    YOu want deficit reduction and spending cuts? Eliminate the lucrative and unsustainable lifetime pension and health care benftts for ALL federal employees, including the White House and COngress. You will save TRILLIONS

    Right now a Congressman can serve a single term and he/she gets lifetime health care for $0.00 and their FULL salary. Same thing for military and government unions - This is where America;s money is going and it is shameful. WAKE UP AMERRICA, YOUR GOVERNMENT IS FLEECING YOU INTO BANKRUPTCY

    June 28, 2011 at 10:05 am |
  6. reg

    seem to me that rep want to cut spending on what helps out the poorer majority of Americans and dems want to take out all the loop holes that the wealthy Americans who can pay the lawyers and accounts to apply to increase their revenue and keep as much money in their hands as possible... i believe there should be spending cuts but not on what many Americans rely on to survive and feed there family's and i definitely believe that the wealthy should be taxed and loopholes be eliminated for those who never have to worry where their next meal comes from ......why are we fighting to keep the wealthy rich and take away and cut at programs struggling Americans need

    June 28, 2011 at 11:12 am |
    • red1961

      They want to keep as much money in there hands as they can becasue they EARNED it.

      June 29, 2011 at 3:33 pm |
  7. Jay

    A tax cut for me is not an expense for the government! If I get to keep more of my OWN money, how is that costing the government anything? If anything, a tax increase is an added expense that I have to pay! But the government not getting money that was never its in the first place is not an expense.

    June 28, 2011 at 5:29 pm |
  8. jean2009

    To quote Franklin Roosevelt at the worst of the depression: "The country needs, the country demands,bold, persistent experimentation." Indeed "the only limit to our realization of tomorrow, will be our doubts of today."

    That is where the right-wing and Republicans fail...they have no dreams for tomorrow only their hording of the failures they have made of today. It is a total fact that each time the Republican trickle down mess has brought us to our knees we have to roll up our sleeves, dream big, and reinvent ourselves.

    June 28, 2011 at 7:50 pm |
    • John

      Right – because we want the whole country to look like California does now. It is amazing that the Dems seem to have no part in the destruction NOW – TARP (I know Bush did the first one), CASH FOR CLUNKERS, BANK BAILOUTS, "AUTO BAILOUT" SPENDING (called stimulas), "GREEN INCENTIVES", MORE TROOPS IN THE CURRENT WAR(S), ANOTHER WAR, A "NON-WAR", another spending program I can't think of the name of, EU MONEY FOR BAILOUTS, BILLIONS TO THE MIDDLE EAST. All this and the Dems can't seem to find a dime to be cut? Very shortly, individual states are going to need money just to stay afloat – where will that come from?
      It is time for everyone to send a message and register IND. I can't imagine another 5 years of this guy. If it is – California here we come...

      June 29, 2011 at 7:58 am |
  9. red1961

    Like I said, if Iraq would RV there Dinar, then our government would have trillions. Bush / canney set it up that way, Barry will get the credit, I, ...I, ...I, ....

    June 29, 2011 at 3:30 pm |
  10. Liz Carter in Georgia

    Oh yeah, isn't Californias' Governor another Repugnant? Arnold who? LOL! Yep, I believe he is a 'CON'! And many of you clowns have claimed that governorship netted good presidential experience. Obama couldn't make a good president because he wasn't a governor, among other snide dismissals! LOL! Oh BTW, wasn't GWB a governor? Reagan was too! Carter and Clinton were too, so that shatters that stupid claim as far as I'm concerned, except for CLINTON; and I don't think CARTER was half bad!

    July 12, 2011 at 9:44 pm |