Bipartisan lawmakers began negotiating ways to reduce the deficit and raise the debt ceiling about two months ago in talks led by Vice President Joe Biden.
President Barack Obama waves as he leaves the White House in Washington, Friday, July 1, 2011, for Camp David, Md.WASHINGTON — President Barack Obama will summon top Republican and Democratic leaders to the White House this week for another round of talks on cutting government spending and raising the nation's borrowing limit, a GOP congressional aide said.
Obama is expected to call for the talks during remarks from the White House late Tuesday afternoon, said the aide, who would speak only on condition of anonymity ahead of the president's announcement.
Bipartisan lawmakers began negotiating ways to reduce the deficit and raise the debt ceiling about two months ago in talks led by Vice President Joe Biden. While both sides said progress was being made, the talks ultimately broke down, forcing Obama to get personally involved in the negotiations.
The chief disagreement between the parties remains over taxes. Democrats insist that a deficit-cutting package of deep spending cuts also include higher taxes for the wealthiest Americans and fewer tax breaks for oil companies. The White House is proposing about $400 billion in increased tax revenues.
Republicans say any such agreement would be defeated in Congress. They want no tax increases and deeper spending cuts than Democrats have proposed.
The Obama administration has warned that if the government's $14.3 trillion borrowing limit is not raised by Aug. 2, the U.S. will face its first default ever, potentially throwing world financial markets into turmoil, raising interest rates and threatening the economic recovery. Many congressional Republicans indicate they're unconvinced that such scenarios would occur, and some administration officials worry that it could take a financial calamity before Congress acts.
With the Aug. 2 deadline nearing, the Senate canceled its July Fourth recess planned for this week.
Obama has said that in talks Republican and Democratic negotiators have found more than $1 trillion in potential spending cuts over the coming decade, including reductions favored by both sides.
A Democratic official said last week that of those cuts, roughly $200 billion would come mainly from savings from Medicaid and Medicare, the government health insurance programs for the poor and elderly.
Another $200 billion would come from cuts in other automatically paid benefit programs, including farm subsidies. Another large chunk would come from cuts in discretionary spending that Congress approves every year — presumably more than $1 trillion, which is more than the White House but less than Republicans have proposed.
Both sides would then also count whatever interest savings they achieve through those deficit cuts.