June 30, 2011

White House Sees Date for Budget Deal or Bust

By MARK LANDLER and JENNIFER STEINHAUER

WASHINGTON — The White House believes it must strike a budget deal with Congress by July 22 to avoid a risk of defaulting on the national debt, Democratic officials briefed on the negotiations said Thursday, as Senate leaders canceled a recess next week to try to break the deadlock with Republicans.
The July 22 date looms large, the officials said, because it will take lawmakers at least a week to draft a bill and get it through two houses before Aug. 2. That is the day when, officials say, the government will reach its debt ceiling and no longer be able to borrow what it needs to keep operating and repay existing debt.
President Obama challenged Republicans on Wednesday to accept higher taxes as part of any package to reduce the deficit, a challenge that House Speaker John A. Boehner swiftly rejected. But underneath these fixed positions, the Democratic officials said, were hints of Republican flexibility, which gives the White House hope that it can strike a deal, albeit probably at the last minute.
While they emphasized that no agreement had been reached on any major items, the officials said the two parties were coalescing around $200 billion in cuts to Medicare and Medicaid, trims that Mr. Obama has held up as an example of cuts that will inflict pain on his Democratic base.
The officials also noted that while Republican leaders like Senator Mitch McConnell of Kentucky had ruled out tax increases, they had sometimes used the phrase “tax rates” — which the White House also does not want to raise. The Republicans, they said, have not explicitly ruled out other measures that would generate revenue, like ending tax breaks and loopholes on hedge funds or for the owners of corporate jets — an interpretation of the Republican position that few Republicans would agree with at this stage.
These tax-related measures being pushed by the White House would generate about $130 billion, a fraction of the roughly $2 trillion in savings over a decade that the White House and Republicans agree is necessary to stave off a debt crisis.
While Republican leaders have not shown enthusiasm for any of these measures, the Democratic officials said, they recognize that passing a bill without some concessions to House Democrats will be difficult, since House Republicans will not be able to corral enough votes on their own to pass a deficit-reduction package.
In his news conference on Wednesday, Mr. Obama chided lawmakers for leaving Washington with a deal undone, comparing them unfavorably to his daughters, Malia and Sasha, who he said finish their homework a day in advance. That rankled some on Capitol Hill, though his words appeared to have hit home.
“We should take responsibility seriously,” the Senate majority leader, Harry Reid of Nevada, said Thursday morning on the Senate floor in announcing the cancellation of the recess next week. “I’m confident we do.”
The Senate has scheduled a flurry of meetings next week, with Mr. Reid inviting Mr. Obama and Vice President Joseph R. Biden Jr. to meet with Democrats on Wednesday. The next day, the White House plans to send its economic team to brief Democrats on the state of the negotiations.
Democrats, echoing the president, continued to insist that tax-related revenue would have to be part of the deal.
“We need a willingness on both sides to give a little,” said Senator Charles E. Schumer of New York. “We’ve given a lot. The vice president has said more than $1 billion in cuts has already been identified. And that would put us far down the road towards an agreement. The question is how to make up the rest.”
Under the rubric of all revenue is personal, Democrats called for the elimination of $126 million in annual tax breaks for the horse-racing industry that Mr. McConnell secured in the 2008 farm bill.
Democrats dismissed complaints that Mr. Obama had been overly combative, noting that Republicans had demanded that he engage in the bargaining process, and then criticized him as soon as he did.
But Republicans were evidently still smarting from Mr. Obama’s chiding tone. Senator Pat Roberts of Kansas even suggested that the president needed some sedation before he resumed discussions with them.
“I remember when he talked to Republicans before, and all we got was a lecture,” Mr. Roberts said. “So maybe if he would just take a Valium and calm down and come down and talk to us, it might be helpful.”