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Obama, Boehner Fail to Strike $4 Trillion Deficit Cutting Deal

by Keith Koffler on July 10, 2011, 11:59 am

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.

Obama at the White House

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.

{ 27 comments }

Star July 10, 2011 at 12:08 pm

Sounds like a sellout to me…but you know, I was nervous about their whacking together some huge deal behind closed doors…and presenting it with a pardon, gun to the head–approve or else. That still may happen. What if we read it and it has stuff like that Weighted CPI crap in it?

Susan July 10, 2011 at 12:54 pm

That is music to my ears that Boehner is standing strong. I know he has been getting a lot of pressure from the Tea Party and conservatives to accept no compromise. Many of us have been making phone calls and sending emails to his office with that message and promising we would support him if he kept his promise of no new taxes. I’ll reserve my praise until we see what kind of deal they make, but right now Speaker Boehner deserves kudos for resisting Obama’s wiles.

Star July 10, 2011 at 1:08 pm

Don’t see it that way myself.

Susan July 10, 2011 at 1:26 pm

That’s one of the greatest benefits of freedom in America. I have the ability to voice my opinion, even if nobody else agrees with me ;-)

Scullman July 10, 2011 at 1:01 pm

“The president believes that we will be a better nation if we redistribute more money from those who have more to those who have less. How much more do we need to redistribute until our system is fair?

As you ponder this question, remember the facts: The wealthiest 5 percent of Americans already account for 59 percent of federal income taxes. Nearly half of our citizens pay no federal income taxes at all. The Tax Foundation reports that the percentage of Americans who are net takers from the tax system is nearing 70 percent.

If our system is not yet “fair,” what will make it so? If the top 5 percent paid 75 percent of the total? Or 95 percent? If they could, would it be ideal for the top 1 percent to carry all the rest of us so we could finally have a tax code that is “fair and balanced?”

Arthur C. Brooks, the American Enterprise Institute

Elect a Professional Grievance Agitator (sorry,”Community Organizer”) leader of the nation, and the above is incomprehensible Martian dialect.

Susan July 10, 2011 at 1:12 pm

What an opportune time for Sarah Palin to call out Obama on debt, as only she can do…via Facebook. Drudge is linking to her post.

http://www.facebook.com/note.php?note_id=10150235296718435

Star July 10, 2011 at 1:18 pm

Was Sarah feeling Bachmann was out-sexinessing her? I know–I am crasss, but she always has to get into everything… I like her, but I am getting sort of tired…

cindyloo July 10, 2011 at 7:17 pm

Me too Star, Me too

Susan July 10, 2011 at 9:12 pm

My opinion is that there is room for more than one woman in the debate. Sexiness shouldn’t even enter the conversation, but it always does. Sarah Palin has never been one to sit down and shut up because her detractors want her to. She takes on Obama the man as “a far-left ideologue”, rather than just attacking his policies. That is something most Republicans are afraid to do.

Star July 11, 2011 at 10:59 am

I know all that, Susan–I admired her for seeing something wrong with PTA or whatever it was and getting into public life and kicking butt and not taking any stuff….but too much is too much. The woman is omnipresent.

srdem65 July 10, 2011 at 1:27 pm

Not too long ago, BillGates and other billionaires signed a pledge to give away half of their fortunes to “charity”. While that sounds like a very generous and selfless thing to do, the truth is that if MrGates gives away half of his estimated 6 billion dollar fortune, he will still have 3 billion dollars left to support his family. Whatever the motivation for these donations, the reality is that MrGates, and the others, earned their fortune and have a right to keep every dime not subject to taxes.

The Obama administration’s attempt to “punish” high earners is nothing more than a class divider. If the IRS were to confiscate all the money that these millionaires and billionaires hold, it wouldn’t even make a dip in our national debt. The Dem’s push to raise taxes on a certain group is, at the least, an attempt to blame the high earners for our fiscal problems.

Hate the rich! Honor the middle class! We love the working family! are all catch phrases of the socialist and communist dogma.
This administration and most of the elected Dems are scaring the heck out of Americans.

Star July 10, 2011 at 2:25 pm

Don’t even know if we have a middle class anymore–is$250K and below middle–is it some percentage of “poverty”…Is it people with hope. People with belief if you work hard, you will benefit? People who tell the truth and don’t automatically lie. What?

Susan July 10, 2011 at 2:55 pm

They are scaring the heck out of us because they have taken off their masks and we see them for what they are. They can no longer claim they are for the middle or working class when their actions prove to be totally opposite. Class warfare is classic Marxism right out of “The Communist Manifesto”. Only difference is Marx identified the class struggle as proletariat vs bourgeois.

Old Timer July 10, 2011 at 4:02 pm

srdem65,

It is called “The Giving Pledge”. You can see who signed up on their website. You did not see the Hollywood crowd on the list. These wealthy support educational purposes, medical research, museums, etc.
The best way to help the middle class is to take the handcuffs off business and let them go about creating real jobs.

Shofar July 10, 2011 at 2:57 pm

When Czarist Russia fell to Lenin and his followers they seized the banks (TARP); foreign debt was unpaid (potential default due to out of control debt to income ratio?); control of manufacturing was given to the workers (union take overs of the auto industry); private bank accounts were seized (higher and higher taxes on the wealthy); wages and hours were set by the government (minimum wage laws vs. free market negotiations for wages).

The growing similarities between Russia October 1917 and the USA 2011 are becoming frightening. The biggest difference today is that the Bolsheviks are in control of the government, and the “people’s revolution” is coming not from the “Reds” but from the Red, White and Blues.

It is sickening that the Regressive Party is so wanting to repeat the failed policies of their idols. The cult like following that Obama and his minions have for the discredited failures of Marx and Lenin makes me wonder if Rasputin hasn’t resurrected himself as a Regressive.

Russell July 10, 2011 at 3:28 pm

Keith, I really appreciate the insight that you provided. I have been watching the “talking heads” the last couple of days and have tried to read as much as possible as to what is going on, but as we all know, the spin is all that we seem to hear and read.

I watched Fox News Sunday this morning when Senator McConnell was being interviewed. The one thing that really surprised me that he said was that the GOP was also wanting a “Ballanced Budget Amendment” to got to the states to be on the table. He said that it would take 3 years or so to be approved by the majority of states then another 5 years to be fully implemented. Again, this is the first that I heard that this is on the table.

I am personal glad that Cantor is keeping an eye on Boehner. I am just not all that sold on him making a deal.

Also, why is it that BHO must always have the “Big Deal”? Does he think that with help etch his name in the hisrory books even more? I am tired of these 2,000 + page deals (I not saying that the impending deal will be 2,000 + pages – but I guess it could be?).

Keith, thanks agin for the insight. Very helpful.

Keith Koffler July 11, 2011 at 4:15 am

My pleasure Russell.

langley barfly July 10, 2011 at 3:53 pm

I NEVER TRUSTED Obama (re: ‘neo-socialist’)…
And right now I DO NOT TRUST Speaker Boehner…

At this rate I think the United States of America needs a tragic & massive “economic crisis” to clean out the cess-pool that is the political class (Dem/Rep) in Washington DC…

Lizzy July 10, 2011 at 4:50 pm

Today it’s like the X-Files. TRUST NO ONE!

Keith Koffler July 11, 2011 at 4:15 am

Lizzy, you should be a journalist . . .

Lizzy July 11, 2011 at 10:13 am

How did you guess this is as close as I will get:)

Star July 11, 2011 at 10:55 am

I am getting to a Pox on Both Their Houses, too.

Car In July 10, 2011 at 6:13 pm

No golf this weekend?

Keith Koffler July 11, 2011 at 4:16 am

Can you imagine?

Knothead July 10, 2011 at 7:54 pm

I am earning $400 a week but I am spending $500 a week. What should I do? (a) apply for a credit card, (b) ask my neighbor for a loan, (c) start living within my means ,or (d) do nothing.

Susan July 10, 2011 at 10:12 pm

Is this some sort of trick question? You already know what you should do. What you will do depends on whether or not you are a Democrat politician. I’m guessing they probably make more than $400 a week though.

Keith Koffler July 11, 2011 at 4:17 am

Knothead – there ‘s a very funny Saturday Night Live sketch where a couple is getting debt advice from experts who keep saying – “Don’t buy it!”