Debt Talks Impasse Leads To Market Fears
The opening of financial markets in East Asia is causing anxiety in official Washington and beyond. The concern is that a Friday night breakdown in talks between President Obama and House Speaker John Boehner on raising the debt ceiling may have negative repercussions when trading gets under way.
More meetings took place all day Saturday, first at the White House, then at the Capitol, seeking that elusive bipartisan deal.
The four top congressional leaders all showed up at the White House for a late Saturday morning meeting convened by President Obama; they all avoided contact with reporters afterward. The White House put out a statement reiterating Obama's opposition to a short-term extension of the debt ceiling, saying it would cause the country's credit rating to be downgraded. It was likely in response to reports that such a short-term deal had been floated at the meeting by the two Republican leaders, Senate Minority Leader Mitch McConnell and Boehner.
McConnell released a statement saying only that the bipartisan congressional leadership was committed to working on new legislation to prevent default. Late in the afternoon, Boehner hosted a meeting in his office, flanked by McConnell and Senate Majority Leader Harry Reid on his right and House Minority Leader Nancy Pelosi on his left. During a brief photo-op, Boehner blithely ignored reporters' questions.
The two Democrats in the meeting, Reid and Pelosi, had just released a statement saying they opposed any short-term fix for the debt ceiling crisis. The two emerged from the meeting nearly an hour later stony-faced and silent. Aides reported they were at an impasse and had no plans for further meetings. Boehner had earlier told fellow House Republicans in a conference call that he hoped to be able to issue what he called a "framework for progress" before the Asian markets opened. The sticking point appears to be the Republican leaders' insistence on a short-term deal to raise the debt ceiling. At the White House Friday evening, just after talks with Boehner had collapsed, Obama made clear he wanted to raise the debt ceiling high enough not to have to do it again before voters go to the polls next year.
"They can come up with any plans that they want, and bring them up here, and we will work on them," he said. "The only bottom line that I have is that we have to extend this debt ceiling through the next election, into 2013."
Boehner aligned himself with the president's stance on that issue when asked about it at the news conference he held Friday evening.
"I'm not really interested in a short-term increase in the debt limit," he said. "I believe that we have two challenges, that we have to increase the debt limit and we have to deal with our deficit and our debt."
But Boehner also made clear he was not backing down on the two conditions he's insisted on for raising the debt ceiling.
"Spending cuts ... must be greater than the increase in the debt limit, and no tax increases," he said.
In other words, all spending cuts and no new taxes to reduce deficits — an approach Obama and Democratic leaders say they cannot agree to. Still, the president said Friday he trusts the debt ceiling will be raised by the deadline a week from Tuesday.
"I am confident simply because I cannot believe that Congress would end up being that irresponsible that they would not send a package that avoids a self-inflicted wound to the economy at a time when things are so difficult," he said.
Boehner was similarly confident:
"No one wants to default on the full faith and credit of the United States government and I'm convinced that we will not," he said.
If that's to happen, a deal to raise the debt ceiling may have to be reached no later than Monday for Congress to enact it by the Aug. 2 deadline.