News Column

Obama Hopeful About Debt-limit Deal

July 15, 2011

Lesley Clark and David Lightman

Capitol with graph and dollars

President Obama said Friday that he's hopeful of breaking a "logjam" and finding a way to raise the federal debt ceiling, even as House Republicans prepare a vote next week on a deficit-cutting plan that's sure to win votes from most Republicans - and to go nowhere in the Democratic-dominated Senate.

Both parties seemed to have an eye on the 2012 elections Friday as they staked out public positions likely to play well with their target audiences even if their gamesmanship doesn't resolve the debt and deficit quagmire that menaces the nation's economy.

At the same time, White House officials and congressional Republicans continued to talk privately about finding a fix.

Warning that "we are obviously running out of time," Obama said at his second news conference in five days that he's open to brokering a compromise with Republicans and pressed congressional leaders to come back to him with a deal.

Treasury Secretary Timothy Geithner, who met Friday with House Republican leaders on Capitol Hill, has warned that the U.S. will go into default on its debts if Congress doesn't raise the debt ceiling, allowing more borrowing, by Aug. 2.

Two debt-rating agencies -- Standard & Poors and Moody's -- have warned that they are close to lowering the U.S. credit rating because of concern that Washington won't raise the debt ceiling, running risk of default. Financial authorities warn that could panic financial markets, causing them to crash and plunging the U.S. economy into deep recession.

Obama, who has sought to trim $4 trillion from the deficit over the next 10 years with a mix of unspecified spending cuts and tax hikes, said he's still pushing for the "big deal" in talks with congressional leaders from both parties and both chambers. But he also acknowledged that if a big deal isn't possible, "then let's still be ambitious, let's still try to at least get a down payment on deficit reduction."

He said the "least attractive option" would be raising the debt ceiling without any cuts in future deficits. A version of that approach is gaining support in the Senate from both parties.

Still, Obama said he's optimistic about progress: "I always have hope," he told reporters. "Don't you remember my campaign?

Republicans insist they will not accept any tax increases. Democrats are wary of cuts in spending on favored programs, especially Medicare, Social Security and Medicaid.

With Washington's familiar partisan gridlock as a backdrop, Obama sought in his televised news conference to engage the public and offer himself as the rational middleman - an approach analysts said is aimed at independent voters frustrated with both parties and who likely will decide the 2012 presidential election.

"He's certainly pitching to wherever public opinion is and to where his critical audience is," said Lee Miringoff, director of the Marist College Institute for Public Opinion, which conducts the McClatchy-Marist Poll. "There's no doubt he's seeking to be the voice of reason, the guy with balance."

Polls show that independent voters are concerned about the country's mounting debt, and unlike Republican lawmakers, aren't opposed to taxing the wealthy or closing corporate tax loopholes to do something about it, Miringoff said.

"The reason we're seeing a lot of President Obama, more than ever before, is he really has public opinion on his side," Miringoff said.

Obama cited polls to suggest that voters side with him, noting that he continues to press for a sweeping package that would include taxing the rich and restraining future entitlement spending, though he has never spelled out details publicly.

"My Republican friends have said that they're not willing to do revenues, and they have repeated that on several occasions," he said at the press conference. "My hope, though, is that they're listening not just to lobbyists or special interests here in Washington, but they're also listening to the American people. Because it turns out, poll after poll show that it's not just Democrats who think we need to take a balanced approach, it's Republicans as well."

Several times he faulted bickering lawmakers, noting that "Congress has run up the credit card, and we now have an obligation to pay our bills."

And he cast himself as the adult, distancing himself from reports that five consecutive negotiating sessions with congressional leaders at the White House this week were contentious.

Meanwhile, House Republicans have their own plan on how to proceed. Their "cut, cap and balance" proposal, unveiled at a House GOP caucus meeting Friday, is unlikely to include any specific spending cuts.

While no final legislation has yet surfaced, the plan, pushed hard by conservatives, is expected to require cuts in spending that would reduce the deficit in half next year. It's $1.5 trillion this year. The legislation also would have enforceable spending caps. If spending exceeds the agreed-upon amount, automatic reductions would be triggered.

"I say it's time to take a stand. And the Cut, Cap and Balance Act of 2011 is that stand," said Rep. Mike Pence, R-Ind.

To House GOP leaders, Tuesday's vote will be a strong statement of their serious intention to make difficult spending cuts. To Democrats, it's a gimmick that "provides cover for people who will eventually have to vote for a deal," as Rep. Rob Andrews, D-N.J., put it.

If Republicans were serious about deficit reduction, they'd keep negotiating with Obama, said House Minority Whip Steny Hoyer, D-Md.

Instead, they're saying, "We are going to proceed in a unilateral fashion," he said.

But House Speaker John Boehner, R-Ohio, insisted that the coming vote will be more than symbolic.

"As Moody's and Standard & Poor's have signaled this week, our nation's economy is literally begging for Washington to take meaningful action to cut spending and reduce the deficit," he said.

Actually, the two ratings agencies said they may have to downgrade the U.S. credit rating if Washington fails to raise its debt ceiling.

The cut, cap and balance plan would not by itself raise the debt limit; that would happen under the GOP plan only if a new balanced budget amendment to the Constitution were ratified. That requires approval by three-fourths of state legislatures as well as two-thirds of each house of Congress, which probably won't happen, and wouldn't happen fast in any scenario.

House Republican leaders hosted a crowded press conference Thursday to announce their plan to push the amendment, but they delayed a vote initially set for Friday -- apparently realizing they couldn't muster the two-thirds majority needed to pass it.

The Senate is expected to vote on the proposed amendment next week.



Source: (c) 2011, McClatchy-Tribune Information Services.