President Barack Obama abruptly walked out of a debt-limit meeting with congressional leaders Wednesday evening after a heated exchange with Republican House Majority Leader Eric Cantor, underscoring the growing tensions between the administration and House GOP leaders and raising further doubts about whether an agreement can be reached before the August 2 deadline.
Cantor, the Number 2 Republican behind House Speaker John Boehner, R-Ohio., has been a constant thorn in the side of Obama throughout the talks, and was instrumental in forcing Boehner to back away last weekend from a major $4 trillion package of spending cuts and tax increases that the speaker and Obama had been trying to negotiate.
Cantor told reporters this evening that the president had become “agitated” and warned the Virginia Republican not to “call my bluff” when Cantor said he would only consider a short-term increase in the debt ceiling, according to CNN and other news reports. "He said he had sat here long enough. No other president, Ronald Reagan wouldn't sit here like this," Cantor told reporters.
Obama warned that he would take his case to the American people if he failed to find common ground with the Republicans on a plan that would both cut the long term deficit and increase the Treasury’s authority to borrow to avert a default on U.S. debt and government obligations.
The nearly two hour meeting meeting “ended with the president abruptly walking out,” Cantor told reporters at the Capitol. “I know why he lost his temper. He’s frustrated. We’re all frustrated.”
A Democratic official familiar with the talks said that Obama did not “walk out in a huff,” but that he sought to underscore the seriousness of the situation. “He made it clear that both sides need to focus on solving the problem, and not politics of one’s caucus or base,” the official said. “He has been willing to compromise and work to get to a solution, and get out of their comfort zone to construct a balanced package. When he was done speaking, he stood up and left.”
This was the fourth meeting in as many days as the White House and congressional Republican and Democratic leaders considered to spin their wheels or talk past one another over the critical issue of the debt ceiling. Federal Reserve Board Chairman Ben Bernanke warned again, in testimony today on Capitol Hill, that a first-ever default by the Treasury would trigger catastrophic economic consequences and would force the government to make sharp cuts in most programs almost immediately if it could no longer borrow from U.S. creditors.
The president has set a Friday deadline for agreeing on a way forward, according to Democratic and Republican officials.
While the leaders were in the meeting, Moody's Investor Services announced it has put the U.S. government’s top-notch credit rating on review for a possible downgrade, pending the outcome of the debt ceiling talks.
Senate Republican Leader Mitch McConnell, R-Ky., has been floating a proposal that would allow the president to repeatedly raise the debt ceiling on his own, without congressional approval, but Cantor and other House conservatives have ruled that out. And since Boehner backed down from his efforts to negotiate a “grand bargain” with the president Saturday night, Cantor frequently has taken the lead for the House Republicans during the White House negotiations.
Earlier in the day, Republican presidential hopeful Rep. Michele Bachmann, R-Minn., and two Tea Party-backed Republicans introduced a measure Wednesday that would prioritize federal spending in the event the U.S. reaches its $14.3 trillion debt limit. Paying military salaries and principal and interest held on the debt would be top priority to avoid a default, according to the proposal.
At a press conference Wednesday morning announcing her legislation, called the “PROMISES Act," Bachmann also reiterated that she would not vote to increase the debt ceiling, despite warnings from Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, who say failure to do so would be catastrophic and cause massive job losses. She doesn’t believe the U.S. will default if Congress does not raise the debt ceiling by $2.5 trillion — the amount President Obama has requested — before August 2. “That is simply not true,” Bachmann said about defaulting. “We cannot go on scaring the American people. We need to be truthful and I call on the President and the Treasury Secretary to tell the truth.”
Earlier this week, House Speaker John Boehner, R-Ohio., said the debt ceiling must be raised. "Nobody wants to go there, because nobody knows what's going to happen," he told the Associated Press Wednesday. "It's a crapshoot."
The trio of conservatives suggested that Boehner not heed the Obama Administration’s warnings. “He is getting dishonest advice,” said Rep. Louis Gohmert of Texas. “I will encourage the Speaker not to believe the President anymore, because the fact is if he does his homework he will find there is such a thing as the Social Security Trust Fund. [The fund] will be able to pay seniors their checks even if Congress does nothing. I would encourage our Speaker to quit believing the President when he uses these scare tactics.”
For the first time on Tuesday, Obama told CBS News that he “couldn’t guarantee” retirees would receive their Social Security checks on August 3, if Democrats and Republicans don’t come to an agreement on reducing the deficit in the next three weeks.
“We don’t believe that for a moment,” Bachmann said. “There are sufficient funds in the Social Security Trust Fund right now to make sure that they get checks.”
Stark Comparison to Greece
Rep. Steve King, R-Iowa., compared the U.S. situation to the crisis in Greece, which is on the verge of debt default
. “If we don’t get our spending under control, we will be Greece and there is no one to bail us out,” King said. “The credit rating we have – we are trying to preserve it with this bill.”
Yesterday, McConnell offered his own “back up” plan should leaders not be able to agree on a deficit package. Under his plan, the President would be to raise the debt ceiling by $2.4 trillion in three increments through the 2012 election. McConnell said he has “become increasingly pessimistic that we cannot reach an agreement” with the President.
The administration welcomed the proposal, but on Wednesday White House press secretary Jay Carney said, “It is not the preferred option.” Carney described Tuesday's meeting as “constructive”. “It allowed participants to exchange different views about how we can build on the cuts we can agree on and how we can get from small to medium to large,” he said at a press briefing. “That process continues today. We believe there is momentum towards achieving significant deficit reduction.”
Senate conservatives, meanwhile, who insist a balanced budget amendment be passed before agreeing to raise the debt ceiling, are withholding support from McConnell’s plan. Senators Pat Toomey of Pennsylvania and Rand Paul of Kentucky declined to endorse the plan, citing efforts to continue work on their “cut, cap and balance” plan.
Democratic congressional leaders responded positively to McConnell's plan and both House Minority Leader Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-N.V., described it as a step in the right direction.
Conservatives quickly assailed the alternative as a sell-out to the White House and said they would oppose it. “That’s the fox in the hen house,” King said. “I’m really apprehensive about such a proposal.”
More on the debt limit debate from The Fiscal Times:
McConnell Turns Debt Ceiling into a Political Football
How Obama’s Social Security Changes Will Hurt You
Mr. President: America Is Paying Attention to the Debt Ceiling