Debt negotiations yield little progress

Associated Press

WASHINGTON

President Barack Obama and congressional leaders Monday emerged still deeply divided over how to slash the nation’s debt, with reality sinking in that even a middle-ground proposal was not big enough to succeed and would not get through Congress anyway.

As time runs perilously short for action, Obama challenged top lawmakers to return to the White House today with fresh ideas for a debt-reduction plan that could pass the House and Senate. All sides are scrambling to reach a deal as part of a tradeoff in which Congress would agree to extend the nation’s debt limit by Aug. 2 to prevent a catastrophic government default on its bills.

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.

He refused even to entertain a backup plan if that doesn’t happen.

“We are going to get this done,” Obama insisted in a news conference.

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.

As the stalemate continues, the pressure increases. A government default could trigger another enormous economic swoon.