White House Sees 'Momentum' But Denies Debt Deal Is Imminent

July 22, 2011
'We are not close to a deal.'

The White House said it sees "momentum" toward a deal to avert a disastrous early-August debt default, but denied media reports that a compromise with top lawmakers may be imminent.

President Obama huddled for nearly two hours late Thursday at the White House with top Senate and House Democrats, unsettled by news accounts that he was close to a broad agreement with Republican House Speaker John Boehner.

"We believe there is momentum behind the idea of a balanced approach to a significant agreement," spokesman Jay Carney told reporters with time running short before an Aug. 2 deadline to raise the $14.3 trillion U.S. debt ceiling.

But Carney rejected a New York Times report citing anonymous congressional officials that said aides to Obama had started informing key lawmakers that a deal was in the works with Boehner.

"There is no deal. We are not close to a deal," said the spokesman. "There is no progress to report, but we continue to work on getting the most significant deficit-reduction package possible."

The Times said the accord would include cuts to government health and retirement benefits programs dear to Democrats as well as new revenues -- a blend in line with how the White House has previously defined a "balanced" deal -- generated through closing loopholes and ending tax breaks.

Such an agreement likely would anger Democrats who pledged to protect the U.S. social safety net as well as Republicans who vowed to oppose increasing revenues, endangering its prospects for passage in the divided Congress.

"The decisions we've got to make right now are tough ones, and nobody likes them. I mean it's always easier to give people more benefits and cut their taxes than it is to raise more revenue and reduce benefits," the president told National Public Radio in an interview to be broadcast Friday.

Media Reports Overblown?

The National Journal, a publication that covers U.S. politics, said the White House and top House Republican leaders were discussing a 10-year, $3-trillion plan to cut the deficit while raising the debt ceiling.

A senior Democratic aide later described media reports of a looming deal as overblown and said it would take another few days to hammer out a compromise from three deficit-cutting options he described as small, medium and large.

Boehner's office also denied The New York Times' report, with spokesman Michael Steel saying that "while we are keeping the lines of communication open, there is no 'deal' and no progress to report."

Washington hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to pay its bills and continue operating normally. But it can only do so until Aug. 2.

Finance and business leaders have warned that failure to raise the U.S. debt ceiling by then would send shockwaves through the world economy, while Obama has predicted that a default would trigger economic "Armageddon."

Word of a deal came after Boehner told reporters that he had braced his restive Republican majority in the House of Representatives for the possibility of having to support a potentially difficult compromise.

Boehner acknowledged that some Republicans would reject any debt-ceiling deal with Obama and his Democratic allies, "but I do not believe that would be anywhere close to the majority."

"It would be irresponsible" for Congress and the White House "not to be looking at backup strategies for how to solve this problem," the speaker added.

Procedural Vote

With time running short, the U.S. Senate was expected to kill, in a procedural vote on Friday, a House-passed Republican plan calling for steep cuts and a constitutional amendment requiring a balanced U.S. budget as the price for a debt-ceiling increase.

Several Democrats fumed over reports that an emerging agreement may not include tax concessions from the rich.

When "we heard these reports of these mega-trillion-dollar cuts with no revenues, it was like Mount Vesuvius. ... Many of us were volcanic," the Washington Post quoted Sen. Barbara Mikulski as saying.

But White House Budget Director Jacob Lew, who faced angry Democrats in a closed-door meeting Thursday, denied such a deal was in the works.

"We've been clear revenues have to be part of any agreement," Lew said.

Obama again praised a plan, crafted by a "Gang of Six" Republican and Democratic senators, to cut the deficit by nearly $4 trillion while ending some tax breaks as a sign of cross-party cooperation.

And lawmakers were discussing a plan crafted by Senate leaders that would let the president raise the debt ceiling by $2.5 trillion in three increments through 2012 with just Democratic votes.

Copyright Agence France-Presse, 2011

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