President Obama and Republican leaders have failed to agree on an “ambitious” debt reduction deal in the range of $4 trillion and will now focus on a $2 trillion plan based on cuts identified by the “Biden Commission” that met throughout the spring.
House Speaker Boehner was forced to back away from the deal amid unhappiness from within his caucus and among fellow GOP leaders with the prospect that the larger deal would include significant tax increases, even if the amount was less than the spending cuts that would have occurred.
My understanding from Republican sources is that the subtext to this is the budget deal in April, which infuriated many in the GOP caucus – particularly the Tea Party faction and newly elected members – when it became clear that the $38 billion in promised spending cuts would never be fully realized and most of the cuts that would occur wouldn’t be made right away.
Conservatives decided there would be no more illusory deals, and that they would hold the line against new taxes, believing that the public had given them control of the House to cut spending and resist tax increases and would be punished for doing otherwise.
Boehner, viewed as a consummate Washington dealmaker, would in future negotiations be watched by his rival, House Majority Leader Eric Cantor (R-Va.). One source told me that, basically, if a deal was on the table this summer to increase taxes, Boehner could do what he wanted, but Cantor would stand up and walk out of the room. And Cantor’s following among conservatives is such that Boehner can’t really make a deal without him.
And that’s exactly what happened. Cantor walked out of the Biden talks over potential tax increases, and Boehner’s deal with Obama was scuttled this weekend when he realized he couldn’t get the support of his fellow GOP leaders or his caucus for a deal that raised taxes.
The White House put out a statement last night suggesting that Obama will continue to seek a Big Deal when he and lawmakers meet tonight, and he’s brandishing a line of attack that amounts to “Republicans wanted to protect their rich friends.”
The President believes that solving our fiscal problems is an economic imperative. But in order to do that, we cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts. We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree.
Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington. The President believes that now is the moment to rise above that cynicism and show the American people that we can still do big things. And so tomorrow, he will make the case to congressional leaders that we must reject the politics of least resistance and take on this critical challenge.
Republicans, for their part are ready to assail Obama as a big tax increaser.
Look for a deal in the range of $2 trillion, and then for the warmup vitriol for the 2012 campaign to begin.