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Video: Debt talks grind on, but little progress

Image: Boehner
Karen Bleier  /  AFP - Getty Images
House Speaker John Boehner arrives for a press conference on Monday at the Capitol.
msnbc.com staff and news service reports
updated 7/12/2011 8:10:46 AM ET 2011-07-12T12:10:46

Faced with an Aug. 2 deadline that will halt the government’s ability to borrow more money, President Barack Obama signaled Monday he wants to resolve the debt ceiling issue so it is removed from next year’s election season.

“I will not sign a 30-day, or a 60-day, or a 90-day, or a 180-day extension: that is just not an acceptable approach,” he told reporters at a White House press conference. “If we think it’s hard now, imagine how these guys (in Congress) are going to be thinking six months from now, in the middle of an election season when they’re all up. It’s not going to get easier; it’s going to get harder. So we might as well do it now: Pull off the Band-Aid. Eat our peas.”

The president continued, "Now is the time to deal with these issues. If not now, when?"

Video: Watch President Obama's news conference (on this page)
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He said he would keep negotiating with congressional leaders until they reach an agreement to reduce future deficits in return for voting to raise the government’s borrowing limit. “We’re going to meet every single day until we get this thing resolved,” he said.

“I’ve been hearing from my Republican friends for quite some time that it is a moral imperative for us to tackle our debt and our deficits in a serious way,” added the president, “So what I've said to them is, ‘Let's go.’”

Obama praises Boehner
Throughout the 42-minute press briefing, Obama repeatedly lavished praise on House Speaker John Boehner, calling him “a good man who wants to do right for the country” and a man who “has been very sincere in trying to do something big.”

Obama portrayed Boehner as the victim of intransigent members of the House Republican caucus.

Video: Ingraham: ‘We need to shrink government’ (on this page)

Seeming to allude to last November’s elections, in which Republican gained more than 60 seats in the House, Obama lamented, “This is part of the problem with a political process where folks are rewarded for saying irresponsible things to win election or obtain short-term political gain … .”

Obama said, “I have a stake in John Boehner successfully persuading his caucus that this is the right thing to do, just like he has a stake in me successfully persuading the Democratic Party that we should take on these problems we’ve been talking about for too long but haven’t been doing anything about.”

"I don't see a path to a deal if they don't budge. Period," the president said, accusing Republicans of having a "my way or the highway" posture.

Boehner response: Democrats 'not serious enough'
At his own press conference after Obama spoke, Boehner said the way to generate an increased amount of tax revenue was to encourage the economy to grow, “broaden the tax base and lower (tax) rates. As (Florida) Sen. (Marco) Rubio said last week ‘we don’t need more taxes, what we need are more taxpayers.”

Obama seems to be thinking in the same direction of a broader tax base and lower rates — but with upper-income people paying more than they do now.

The president said if Republicans are unwilling to restore top income tax rates to 2000 levels and scrap some tax loopholes he would be happy to work with Republican on changes that could lower tax rates and broaden the tax base “as long as that package was sufficiently progressive.”

But Boehner explained, “Our disagreement with the president is not about closing loopholes, none of us are fond of loopholes; our disagreement is over the idea of raising taxes on the very people that we’re asking to create jobs in our country.”

Video: Boehner: 'House will not raise taxes on job creators' (on this page)

Boehner seemed to make a softening in the Democratic position on entitlement reform as a precondition for progress at the bargaining table. He told reporters that the Democrats, including the president, “are just not serious enough” about changes in Medicare, Medicaid and Social Security that would result in lower spending growth in those entitlement programs.

“There is in fact a way to do this,” he said. “But that conversation can’t continue if they’re not serious about fundamental reform of the entitlement programs.”

He acknowledged that GOP leaders will need the aid of some Democratic members in order to get a debt limit bill passed. “Whatever agreement we come to is going to have to pass the House and the Senate on a bipartisan basis.”

In a separate session with reporters, House Majority Leader Eric Cantor said, "These votes aren't easy, taking away entitlement benefits from people is not something that's pleasurable, OK, but we're trying to get the fiscal house in order here."

According to the latest Treasury forecast, Aug. 2 is the day the $14.29 trillion borrowing limit is reached and the Treasury will have a zero cash balance. It would then need to pay vendors, federal employees, etc. entirely out of the daily incoming cash flow.

Cantor said, "I accept (Treasury) Secretary Geithner's claims that if we go beyond the date of Aug. 2 that there will be a downgrade and interest rates that go up will quickly wipe out any savings potential that we're working on here, which is why it's imperative that we all come together."

But he added that in his view financial markets "are looking to see that we're going to be a nation that can actually get our act together, can fully amortize our debt, and begin to grow again so we can shrink the amount of debt." Merely voting to raise the borrowing limit, he said, is not what financial markets want Congress to do. 

Some short-term economic stimulus
Obama described a package that would combine an array of short-term stimulus measures with tax increases and spending cuts in the longer term.

First Thoughts: Walking away from a debt deal

He said an extension of the Social Security payroll tax cut, which Congress enacted last December and which is set to expire at the end of this year, ought to be part of any accord, as should an extension of unemployment insurance benefits, and the creation of a new federal bank to finance infrastructure projects.

The president said he sought more tax revenues simply to reduce future budget deficits and avoid cuts in spending that might hurt vulnerable people — and that, he said, could be done only by getting more revenue from upper-income people. “It’s not that I want to raise revenues for the sake of raising revenues or I’ve got some grand ambition to create a bigger government,” he said.

"If you don't do the revenues, then to get the same amount of savings, you have to add more cuts, which means it's seniors, it's poor kids, it's medical researchers or our infrastructures that suffer," Obama added.

The president also explained that the tax increase he is seeking would not take effect until 2013.

Story: Presidential candidates warn about compromise in debt deal

“Nobody has talked about increasing taxes now,” he said. “Nobody has talked about increasing taxes next year. What we have talked about is that starting in 2013, that we have gotten rid of some of these egregious loopholes,” such as those benefiting owners of corporate jets, he said.

“As part of a broader package we should have revenues and the best place to get those revenues is from folks like me who have been extraordinarily fortunate ... Millionaires and billionaires can afford to pay a little bit more.”

Keeping the pressure on congressional Republicans, a prominent conservative group, the Club for Growth, announced Monday a new TV ad barrage in which it demands that Republicans oppose a vote to increase the borrowing limit without cuts in spending and passage of a constitutional amendment to balance the budget

Video: DeMint: No need to ‘rush into a deal’ (on this page)

“What will Republicans do? Cave in? Or show some spine?” the ad says. “We already have one party committed to bigger government. We don’t need another.”

In one piece of encouraging news the Congressional Budget Office reported Friday that tax receipts for the first three quarters of this fiscal year were 8.5 percent higher than in the same period last year. Individual income tax receipts, the largest source of tax revenue, are up 24 percent compared to the same period last year.

At Monday’s press conference, Obama refused to get into a discussion of specific changes in Social Security, Medicaid and Medicare. One idea reportedly under discussion in the budget talks is a change in the formula used to make the cost-of-living adjustment (COLA) for retirees collecting Social Security benefits so as to reduce payouts to retirees in future decades.

Obama said public wasn’t paying attention to the details of the debt ceiling debate, but people would soon feel the effects of a “crisis of confidence” in financial markets if Congress did not raise the borrowing limit.

Describing that scenario, he said, “suddenly interest rates are going up significantly and everybody is paying higher interest rates on their car loans, on their mortgages, on their credit cards. That’s sucking up a whole bunch of additional money out of the pockets of the American people. I promise you, they won’t like that.”

Msnbc.com's Tom Curry contributed to this report.

© 2013 msnbc.com

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