TOPICS > Politics

Debt Battle Growing More Urgent, but GOP, Democrats Not Budging Yet

June 29, 2011 at 12:00 AM EDT
At a White House news conference Wednesday, President Obama insisted that congressional leaders put everything on the table, including spending, benefits programs and tax increases, in order to reach a debt limit deal. Jeffrey Brown discusses ongoing negotiations with Sens. John Barrasso, R-Wyo., and Robert Menendez, D-N.J.
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JEFFREY BROWN: President Obama challenged Republicans today to compromise on taxes, or risk letting the country default on its debt. He rejected criticism of his leadership on the issue, and instead took his critics to task in blunt terms.

The president used his first White House news conference in three months to insist that congressional leaders put everything on the table, spending, benefits programs like Medicare, and tax increases for the wealthy, in a bid to cut the national debt.

PRESIDENT BARACK OBAMA: Call me naive, but my expectation is that leaders are going to lead.

The Republicans say they want to reduce the deficit. Every single observer who’s not an elected official, who’s not a politician, says we can’t reduce our deficit in the scale and scope that we need to without having a balanced approach that looks at everything.

Democrats have to accept some painful spending cuts that hurt some of our constituencies and we may not like.

JEFFREY BROWN: Vice President Biden has led talks on reducing the deficit by $4 trillion, while raising the federal debt ceiling. The talks broke down last week, as Republicans refused again to support tax increases. Instead, they pressed for deeper spending cuts.

Today, the president said if Republicans focus solely on spending, it will mean cutting everything, from college scholarships to food inspections.

BARACK OBAMA: If everybody else is willing to take on their sacred cows and do tough things in order to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say that the tax break for corporate jets is sufficiently important, that we’re not willing to come to the table and get a deal done, or, we’re so concerned about protecting oil and gas subsidies for oil companies that are making money hand over fist, that’s the reason we’re not going to come to a deal.

I don’t think that’s a sustainable position.

Everybody else has been willing to move off their maximalist position. They need to do the same.

JEFFREY BROWN: Still, Senate Republican leaders showed no sign of giving way. Instead, even as the president spoke, they called for a constitutional amendment to limit spending.

SEN. MITCH MCCONNELL, R-Ky. minority leader: Our view is a good first step is a balanced budget amendment to the Constitution. We think it’s pretty clear, regardless of what we are ultimately able to negotiate here in the short term, that we put the federal government in this kind of fiscal straitjacket for the future, so that we cannot get into this position again.

JEFFREY BROWN: That situation now revolves around an Aug. 2 deadline to raise the national debt ceiling, the amount the government is allowed to borrow. If no agreement is in place, it could mean a national default.

With that in mind, President Obama lectured lawmakers to learn a lesson from his two young daughters.

BARACK OBAMA: Malia and Sasha generally finish their homework a day ahead of time.

(LAUGHTER)

BARACK OBAMA: Malia is 13. Sasha’s 10.

QUESTION: Impressive.

BARACK OBAMA: It is impressive. They don’t wait until the night before. They’re not pulling all-nighters.

(LAUGHTER)

BARACK OBAMA: They’re — they’re 13 and 10. You know, Congress can do the same thing. If you know you’ve got to do something, just do it.

JEFFREY BROWN: And the president rejected Republican complaints that he show more leadership. He said his critics need to act like leaders and stop taking time off.

BARACK OBAMA: They’re in one week, they’re out one week, and then they’re — they’re saying, Obama’s got to step in. You need to be here. I have been here. I have been doing Afghanistan and bin Laden and the Greek crisis and…

(LAUGHTER)

BARACK OBAMA: You stay here. Let’s get it done.

JEFFREY BROWN: In the meantime, Treasury Secretary Timothy Geithner rejected suggestions from some Republicans that the government could temporarily pay just the interest on the national debt, rather than raise the borrowing limit. Geithner insisted he cannot stave off default if the August deadline is ignored.

And the International Monetary Fund issued its own warning, urging U.S. lawmakers to reach a deficit agreement and raise the debt ceiling.

JOHN LIPSKY, International Monetary Fund: We wouldn’t want to get into — into…

MAN: Hypotheticals.

JOHN LIPSKY: … hypotheticals, but suffice it to say it should be self-evident. A debt default by the — in the U.S. government debt market would have very serious, far-reaching, dramatic repercussions. And that’s why we are confident that it will be avoided.

JEFFREY BROWN: Toward that end, the president met this afternoon with Senate Democratic leaders, looking for a way to move the discussions forward.

And with the president blasting lawmakers, we get a response from two senators: Wyoming Republican John Barrasso, a member of his party’s leadership team, and New Jersey Democrat Robert Menendez, who sits on the Finance Committee.

Sen. Barrasso, I will start with you.

The president said he thinks Republicans must and will give some ground on tax revenues. Will they? Is there any room for movement?

SEN. JOHN BARRASSO, R-Wyo.: No, there really is not — 9.1 percent unemployment, the worst thing we should do is raise taxes on anyone during economic times like these.

We want to get people back to work. The way to actually increase revenue for the government is to get people back to work. A robust, growing economy is the way to have more tax revenue coming in, not by raising taxes in these economic times.

JEFFREY BROWN: But the argument from the president, of course, is that, unless we do that, we won’t get an agreement, we will have a default, and then will be even worse for the economy and jobs.

SEN. JOHN BARRASSO: Well, I think the president is making the economy worse in many ways. And wanting to raise taxes is one of them. A lot of the rules and regulations coming out of his administration is making it harder and more expensive for the private sector to create jobs.

And, as a Republican and a conservative, I’m looking for ways to make it cheaper and easier for the private sector to create jobs.

JEFFREY BROWN: Sen. Menendez, at the same time, the president referred to sacred cows, though. Does that mean that Medicare, Medicaid are — must be on the table? Should Americans be told to expect some changes to their benefits in the future?

SEN. ROBERT MENENDEZ, D-N.J.: Well, before we get to that, it just seems to me that only in Washington could taking away $21 billion in tax breaks to the top five oil companies is somehow raising taxes.

Average Americans don’t get those tax breaks. And certainly, the oil companies, who will make $144 billion in profits this year alone, don’t need that from the American taxpayers. Ethanol, which an overwhelming number of Republicans and Democrats supported in a vote about a week ago, in terms of eliminating those subsidies to the tune of $2 billion, $2.5 billion, is another opportunity to stop giving tax breaks to an entity that doesn’t need it, and give the American taxpayer relief.

So, as we talk about sacred cows, it seems to me that those need to be on the table as well, if we’re going to be talking about Medicaid and Medicare.

JEFFREY BROWN: Well, Sen. Barrasso, what about that? Why are those kinds of targeted tax hits that the president is talking about, why are those unacceptable, at the very high end?

SEN. JOHN BARRASSO: People all around the country are already feeling the pain at the pump. They’re paying about a dollar a gallon more for gasoline than they did last year at this time.

The average family in this country, they’re going to be paying about $800 more this year to fill their tanks than they did last year over the course of the — of the year. So, I don’t think raising energy costs for American families, which is what’s going to happen if the president gets his way with wanting to raise taxes, that’s not going to improve lives for families who are trying to put food on the table.

And people are noticing the increased cost of groceries as well, and trying to get their kids off to school and clothing on their backs. So, I don’t think that raising energy costs is a way to go.

JEFFREY BROWN: Well, Sen. Menendez, come back to my question about Medicare and Medicaid as sacred cows, because I want to see where the — where the lines are here on both sides.

Should Americans — again, should Americans be told by Democrats and by the president to expect that their benefits are going to have to be on the table in the future?

SEN. ROBERT MENENDEZ: Well, again, if we are going to do that, it has to be in the totality.

You know, Republicans have a view that it is only their way or the highway. It is their view that, you know, big oil should keep all their tax breaks. And, to be honest with you, to suggest that the cost of gasoline is going to rise because, instead of making $144 billion in profits, the oil companies would make $142 billion in profits, it’s pretty surrealistic, in my mind.

So, yes, everything, spending cuts, defense cuts, looking at entitlements under Medicare and Medicaid, and revenues need to be part of the equation. But for so long as we have this ideologically driven, particularly in the House on the Tea Party, the focus that no revenue whatsoever, including eliminating tax breaks for big oil, eliminating tax breaks for ethanol, eliminating other tax breaks that only a very few Americans get, to the cost of all Americans, that that’s somehow is a tax increase, well, then we’re going to be headed to a very bad conclusion here, because I have to be honest with you.

If we do not meet the nation’s debt obligation, then the consequences are going to be incredible in the marketplace. People will lose significant amounts of the values of their retirement portfolios and 401(k)s. They will see contraction by companies that, instead of investing and creating jobs, they will say, oh, no, I’m going to hold back. And we will put this economy back into recession. And that’s what the Republicans are playing with.

JEFFREY BROWN: Well, let me ask that to Sen. Barrasso, because that — the consequences question. I’m not hearing much room for compromise from either of you in this discussion.

So, do you accept what the president said, what Sen. Menendez just said, that we are up against a deadline, that the consequences are rather bad?

SEN. JOHN BARRASSO: We are up against a deadline, so it’s good that, finally, the president has gotten involved and gotten engaged in this.

The Democrats haven’t brought a budget to pass the Senate in over 790 days in this country. Since the last time this — the Democrats passed a budget in the Senate, the national debt has risen $3.2 trillion. So, I think it is about time that the president has gotten engaged.

I want to work together to find a solution. But when the president says a balanced approach, I want a balanced budget. We need a balanced budget amendment to the Constitution. We need to, as a nation, live within our means. Families all across America have to do that. Many states balance their budget every year. We certainly do in Wyoming. It’s time to have a balanced budget amendment to the Constitution.

JEFFREY BROWN: Well, you both talk of urgency, and yet weeks keep going, and there aren’t — isn’t that much time until Aug. 2.

Sen. Barrasso, starting with you, wouldn’t — wouldn’t citizens at home be listening to this and wondering if there really is a sense of urgency in Washington? What do you say?

SEN. JOHN BARRASSO: Well, there certainly is on my side of the aisle.

I see that the president had a debt commission and essentially ignored it. And then the vice president had some talks, and finally now, this past week, the president has gotten engaged. He said that members should stay here over the — stay here working.

I wanted to stay here over Memorial Day, signed a letter to Harry Reid, the Democrat leader of the Senate, as did all of my colleagues, saying, we should be working on this today. He said, no, no, take a break. Go home.

We ought to be working on this and finding solutions. And I think one of the ways to go is balancing the budget and committing us as a nation to balancing the budget, because you cannot continue with this kind of debt. It’s irresponsible. It’s unsustainable. And the ongoing spending is the problem. Americans, you know, don’t complain about being taxed too little. It’s that we as a nation spend too much.

JEFFREY BROWN: Sen. Menendez, what’s your response to the urgency question, what people at home should think as they listen to this debate, as they watch the president, they watch what’s going on?

SEN. ROBERT MENENDEZ: Well, there’s no question that there is a sense of urgency.

We had over 200 economists, including several Nobel Prize winners, who said, you must raise the debt ceiling, or the consequences to this economy are enormous; the consequences to average Americans are enormous as well, loss of job opportunity, recession, loss of, you know, retirement income, just to name a few, a global consequence if the United States defaults, which means reverberations even further back here at home.

So, you know, but, look, slogans and letters about staying in won’t get us anywhere. What’s going to get us somewhere is — as we did in 1992-’93, when we had Bill Clinton and the Deficit Reduction Act, we had entitlement changes, we had some very significant spending cuts, and we had revenue.

That created the first balanced budget in a generation, record surpluses, low interest rates, low inflation, and the greatest peacetime economy in over a generation.

JEFFREY BROWN: And just brief…

SEN. ROBERT MENENDEZ: There is an equation to do that. And we just need to get back to that equation again.

JEFFREY BROWN: Well, and just — and just briefly, Sen. Menendez, do you see any signs that that could happen?

SEN. ROBERT MENENDEZ: I am still optimistic, at the end of the day, that my Republican colleagues will come to understand that they cannot afford for the country to allow the country to default on its obligations.

Families at home understand the consequences on defaulting on their obligations.

JEFFREY BROWN: All right.

SEN. ROBERT MENENDEZ: The nation cannot afford to default on its.

JEFFREY BROWN: And, briefly, last word from you, Sen. Barrasso? You have any hope?

SEN. JOHN BARRASSO: Well, I do have hope. But the president wants a blank check and a new credit card, and I’m not willing to give it to him.

JEFFREY BROWN: All right, Sens. Barrasso and Menendez, thank you both very much.

SEN. ROBERT MENENDEZ: Thank you.