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Politics

Obama, House Republicans to cut deficit

Updated: 2011-07-22 11:43

(Agencies)

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WASHINGTON - President Barack Obama and House Republican leaders reached anew on Thursday for an elusive deal to cut deficits by $4 trillion or more and prevent a threatened government default in less than two weeks, officials said.

House Speaker John Boehner declared that his rank and file generally stood ready to compromise in order to reach an agreement as a way of "getting our economy going again and growing jobs.

Still, as the August 2 default deadline loomed, officials stressed that no compromise appeared imminent. And new hope of one ran instantly into old resistance: from Republicans opposed to higher taxes and Democrats loath to cut benefit programs.

While talks on a major, long-term agreement continued, a fresh, shorter-term backup plan appeared to be gaining momentum. Under discussion among some House Republicans, that proposal would cut spending by $1 trillion or slightly more immediately and raise the debt limit by a similar amount - enough to postpone a final reckoning until early in 2012.

Both sides maneuvered for political advantage and for leverage in negotiations about which little was publicly known.

"At the end of the day, we have a responsibility to act," said Boehner of Republican lawmakers.

Across the Capitol, however, Senate Majority Leader Harry Reid, a Democrat, blamed some of the same Republicans - "tea party extremists," he called them - of blocking a deal.

The sometimes-conflicting information underscored the frenzied final days before a threatened default, when the Treasury would no longer be able to pay all its bills in full and the economy could go into a tailspin as interest rates spiked.

Some Democrats confided they were worried Obama would sign off on an agreement that cuts benefit programs without raising tax revenue, and they peppered Budget Director Jack Lew - in a closed-door meeting in the Senate - with questions about the high-level negotiations.

The president has said publicly he wants a deficit-reduction plan that includes both, and Reid pointedly reminded him that was the case.

"My caucus agrees with that and hope the president sticks with that, and I'm confident he will," Reid said.

Within hours, he and other senior Democrats in both houses were on their way to the White House to meet again with Obama.

That meeting lasted nearly two hours and Democratic officials familiar with Obama's talks with Republicans said that while some cuts could be agreed upon and even enacted relatively quickly, there were major differences on taxes and savings from benefit programs like Medicare and Social Security.

As an example, there is no agreement on how much additional revenue would be raised through an expected overhaul of the tax code, or how to require Congress to enact cuts to benefit programs.

The officials spoke on condition of anonymity in order to discuss sensitive negotiations.

One official said the White House had notified Democratic congressional leaders Wednesday night that Obama and the House leaders appeared to be closing in on a deal that is said to include $3 trillion in spending cuts but only a promise of higher revenues.

Boehner's office and the White House said that account was overblown in part and inaccurate in part. Some Republicans charged it had been spread to anger Democrats and torpedo any possibility of a deal that would cut benefit programs for the elderly.

"We're not close to a deal," said Jay Carney, the White House press secretary.

The government's debt stands at a record $14.3 trillion and has been growing by more than $1 trillion a year. Obama's request for an increase prompted Boehner to say months ago that any rise must be accompanied by spending cuts of at least the same amount.

Publicly, some Republicans insisted they would not entertain any fallback measure as long as a separate House-passed bill was pending in the Senate. But Reid said the legislation "doesn't have one chance in a million of passing the Senate," and privately senior Republicans in both houses were operating on the assumption that it would fail when the vote is taken, likely Friday.

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