Updated 9:54 p.m. Friday
A clearly agitated President Obama walked out in front of cameras Friday evening to announce that 11th hour talks with Speaker John Boehner and House Republicans to raise the federal borrowing limit and cut the deficit had collapsed. “What this came down to was there doesn’t seem to be a capacity for them to say yes,” Obama said.
Roughly an hour later, Speaker Boehner appeared before reporters on Capital Hill to say talks had broken down because President Obama had “moved the goal posts,” during the final hours of the negotiation, and that Boehner would now continue negotiations with House and Senate leaders. The final sticking point between the two men is a dispute over $400 billion in tax increases over 10 years, or less than 1% of the total federal budget during that time. Boehner and Obama had already agreed to $800 billion in revenue increases and several times as much in spending cuts, including cuts in entitlements. “It’s the president that walked away from his agreement,” Boehner said. Obama denied any backtracking in negotiations.
Despite the breakdown in talks, Boehner said he would meet with the President at the White House Saturday morning to continue negotiations. “I do trust him as a negotiator,” Boehner said of Obama. Both men said they are confident that the debt ceiling can be lifted in time to prevent an unsettling of financial markets and a spike in interest rates. But the prospects of an overall deficit reduction deal, which markets are also looking for, remains in doubt.
Obama’s White House appearance was remarkable both for its expressions of outrage and promises of transparency. In recent weeks, the White House has been careful not to leak the details of the negotiations. But on Friday, notably after financial markets had closed, Obama said that the talks had broken down over the issue of revenue increases.
Obama said he had demanded $1.2 trillion in additional revenues over 10 years, in exchange for spending cuts, including cuts to Medicare and Social Security. He said the revenues had been structured in a way that marginal tax rates would not be increased, and no Republicans would be forced to cast a vote that would violate the Taxpayer Protection Pledge, which most Republicans in Congress have signed. Boehner had signed off on a plan that would increase revenues by $800 billion over the next 10 years, which he believed did not break the pledge. But after Senate Democrats revolted on Thursday, demanding the bargain include more revenues, Obama went back to Boehner asking for $400 billion more. Boehner said that the additional revenue would have amounted to a tax increase that would hurt small businesses.
“This was an extraordinarily fair deal. If it was unbalanced, it was unbalanced in the direction of not enough revenue,” Obama said. “It is hard to understand why Speaker Boehner would walk away from this kind of deal.”
For weeks, negotiations between Obama and House Republicans have been marked by cycles of public posturing, followed by respectful backroom discussions. It is difficult to know if the latest breakdown is just another round in that cycle, prefacing a final deal before Monday, or if it signaled a bigger collapse of the ability of leaders to work together. But hard deadlines are fast approaching. Financial markets are likely to punish Congress and the country on Monday if no deal is in sight.
“It’s very important that the leadership understands that Wall Street opens on Monday, and we better have some answers,” Obama said. “I remain confident that we will get an extension of the debt limit and that we will not default.”
Obama said he was less confident that Republicans and Democrats could agree to a plan that would significantly cut deficits in the coming years. No plan can pass the House and the Senate without bipartisan support, as the Senate is controlled by Democrats while the House is controlled by Republicans.
“The American people expect action,” Obama said. “The American people I think are fed up with political posturing and an inability for politicians to take responsible action.”
“I take the same oath as the President of the United States. I have the same responsibilities as the President of the United States,” Boehner responded minutes later at the other end of Pennsylvania Avenue. “I think we can work together here on Capitol Hill to forge an agreement.”
With Jay Newton-Small