MS. IFILL: The standoff over the debt ceiling turns toxic. Was the president jilted or did he ask for too much? And is there a way forward anymore? Late breaking news tonight on “Washington Week.”

SEN. HARRY REID (D-NV) [Senate Majority Leader]: As the saying goes, indecision becomes decision with time.

REP. ERIC CANTOR (R-VA) [House Majority Leader]: Harry Reid keeps saying that somehow the House won’t work with him. Where are his ideas?

MS. IFILL: Are lawmakers inching closer to agreement in the debt ceiling debate?

REP. JOHN BOEHNER (R-OH) [Speaker of the House]: I would just suggest that it’s going to be a hot weekend here in Washington, D.C.

MS. IFILL: Or are they farther apart than ever?

PRESIDENT BARACK OBAMA: I just got a call about a half hour ago from Speaker Boehner who indicated that he was going to be walking away from the negotiations that we’ve been engaged in here at the White House.

MS. IFILL: The dispute reverberates in the states among voters and all along the 2012 campaign trail.

MITT ROMNEY [Republican Presidential Candidate]: The president is fond of saying that he didn’t cause the recession, that he inherited the recession. And that’s true. But he made it worse.

MS. IFILL: So what happens next? Covering the week, Jackie Calmes of the New York Times; Naftali Bendavid of the Wall Street Journal; Dan Balz of the Washington Post; and John Harwood of CNBC and the New York Times.

ANNOUNCER: Award winning reporting and analysis, covering history as it happens, live from our nation’s capital, this is “Washington Week with Gwen Ifill,” produced in association with National Journal.

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ANNOUNCER: Once again, live from Washington, moderator Gwen Ifill.

MS. IFILL: Good evening. Well, that head banging you may be hearing is the sound of frustration here in Washington as the 2nd August debt ceiling deadline grows ever closer. Negotiations collapsed again tonight. Get the latest twists in a series of talks where each party has had its turn walking away from the table. The president came into the White House briefing room late today to offer his version of events.

PRES. OBAMA: Up until sometime really today when I couldn’t get a phone call returned, my expectation was that Speaker Boehner was going to be willing to go to his caucus and ask them to do the tough thing but the right thing. I think it has proven difficult for Speaker Boehner to do that. I’ve been left at the altar now a couple of times. And I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything?

MS. IFILL: Speaker Boehner then came before the cameras and said the rules had changed.

REP. BOEHNER: Now let me just say that the White House moved the goal post. There was an agreement on some additional revenues until yesterday when the president demanded $400 billion more, which was going to be nothing more than a tax increase on the American people.

MS. IFILL: So it’s been like this all week. First there was the McConnell solution, then the Reid solution, and then the revival of the formerly paralyzed bipartisan negotiators known as the Gang of Six.

SEN. MARK WARNER (D-VA): Reports of our demise were greatly exaggerated. And, you know, of course it’s kind of been like a zombie movie. We’ve been dead many times over the last few months.

MS. IFILL: Now, House Republicans wanted something else entirely – a new version of the balanced budget amendment they called cut, cap, and balance. That died today in the Senate. The president said earlier today that divided government does not have to be dysfunctional government but it’s hard to see that tonight.

Jackie Calmes is in the New York Times newsroom on deadline with this story tonight. Jackie, what happened?

MS. CALMES: Well, it’s like you said, and the president said as well, that for the second time these talks have broken down. They’ve very private, secret talks initially between the president and Mr. Boehner, the House speaker. But the minute or soon after the word leaked that these talks were going on and just what was on the table, each party, Mr. Boehner and Mr. Obama, were getting flak from their parties.

And yesterday we were sort of focused on the congressional Democrats’ blowback to Mr. Obama because of concessions he was reportedly making on the entitlement programs – Medicare, Medicaid, Social Security – but today, with Speaker Boehner’s walkout from the talks, it’s clear that he’s gotten plenty of blowback from his side yet again like earlier in the month when he left the talks. His side is just not willing to raise revenues as part of a deal.

MS. IFILL: Now, Jackie, you wrote yesterday, you and your colleague, Carl Hulse, at the Times wrote that there was a deal that was close. And then everyone denied it. And it seemed to have fallen apart by tonight. Were they ever close? The president says no. At least Boehner says no.

MS. CALMES: Well, you know, the truism here – you’ve heard it yourself – is nothing is agreed to until everything’s agreed to. It was always clear that both men were going to have to take this deal out and sell it.

The thing is both men – and Speaker Boehner know that this is something that there has to an increase in the debt limit. We’re talking here about this deficit reduction agreement over a 10-year period in the trillions of dollars. But, you know, at bottom, what needs to be done is to increase the debt limit by August 2nd or the country flirts with default and the economic quake that that will set in motion.

So this is part of what would provide political cover and substantive cover for doing that, but it’s standing in the way of getting what needs to be done, done. It’s an opportunity on the one hand to get deep deficit reduction, but if they can’t agree to that they can also – cannot not increase the debt limit.

There’s brinkmanship all the time. We’ve talked earlier this year about the government shutdown. It’s one thing to shut down the government. It’s another thing to provoke a government default. They’re two – and this is so much worse. The ramifications are so potentially much worse that there has to be some resolve.

MS. IFILL: Naftali, the president said today when he came out in the briefing room, I want everybody here tomorrow morning at 11:00 a.m. and we’re going to talk again, which John Boehner said he would be there. But John Boehner also said that he was going to start his own negotiations with his counterparts in the Senate. How does that work?

MR. BENDAVID: Well, that’s a good question. And it’s one of the real complexities of what’s happening now. Mr. Boehner made a big point that he was leaving the talks with the president. He was done with this. And the only to get this done was in quieter talks with colleagues from both parties. But in a way the president upstaged him by essentially summoning the party leaders to the White House.

I think one of the factors here is that Mr. Boehner may feel it’s more difficult for him to sell a deal to his own members when they’ve been reached in the context of White House talks led by the president, whereas if they’re achieved in sort of more private discussions with the Democrats on the Hill, then it would be easier. So it’s going to happen probably is that both things are going to take place.

On the one hand, you’ll have Boehner, as well as the other congressional leaders at the White House tomorrow at 11:00 a.m., but at the same time you’ll have more private talks going on probably between staff of all the members. And we’ll see which talks will progress the fastest.

MS. IFILL: John, let’s unpack this a little bit. We’ve seen these kinds of things fall apart before but usually not so spectacularly. If they were talking, which – the conventional wisdom is at least earlier this week was that at least that the president and speaker were talking. If that’s true, what stopped that? What derailed it? Certainly it’s not just because John Boehner is scared of his caucus?

MR. HARWOOD: Well, I think that is lot of the equation.

MS. IFILL: That’s what the president suggested.

MR. HARWOOD: Well, yes, and it’s not just the president. Look, Jackie’s point was exactly the right one. The president and the speaker can make a deal. In fact, it would be easy for them to make a deal. They both want a deal. They want a deal of similar size. They want to avoid a default.

The question is how do you get 218 votes in the House and 60 votes in the Senate? And what that means is you’ve got to get a large chunk of Republicans in the House, some Democrats, a large chunk of Democrats in the Senate and some Republicans. It’s not easy to do.

I was on the phone last night at 1:00 a.m. in the morning with a Republican member of Congress, veteran, conservative, somebody who served for a while, who wants to see a deal get done. And we were talking about the back and forth that Jackie mentioned yesterday when she said Democrats were objecting to the terms they understood the president to be negotiating with Speaker Boehner. And he said, yes, John Boehner could put forward a plan in the House of Representatives that has $3 trillion in spending cuts and $1 trillion in revenues and then he wouldn’t be speaker anymore. That is the wall that he was up against in terms of the resistance of his members to raise taxes. This member said, our guys do not think we were sent here to raise taxes and we’re not going to do it.

MS. IFILL: Well, Dan, on the other side, were the Democrats just as resistant in many ways with the president? Because yesterday when there was talk of this deal coming, it was the Democrats who were screaming the loudest that this was not acceptable.

MR. BALZ: Well, it looked to the Democrats, from whatever vantage point they were able to see inside the negotiations, that this deal was way heavily weighted in terms of spending cuts with almost no revenue in it. And so they were responding to reports about what seemed to be part of the agreement. And they were very upset. And I think for the first time it reminded people that the president could have some serious problems.

But I think all along people have assumed that the president would in the end be able to get Democrats behind whatever agreement he was able to negotiate with the speaker as opposed to the question of whether the speaker would ever be able to get House Republicans to go along with the deal he negotiated with the president.

MS. IFILL: Here’s what puzzles me tonight in part, Jackie, and I’ll start with you on this. The president said he would be willing to sign a short-term deal if that’s what it takes, which I don’t know what else there is for him to do at this point. But his idea of a short-term deal is something that will take us through the elections. That doesn’t sound like the kind of short-term deal we’ve been hearing from the congressional negotiators.

MS. CALMES: No. I mean, actually, at this stage, any debt limit deal that will take us through the 2012 elections would be a huge win at this point. It’s hard to see that happening.

But what’s really – you know, Speaker Boehner said he was going to go back to the Hill, Capitol Hill and negotiate with senators on some deal. But it’s hard to image what is that alternative now though. It’s not like for lack of trying that he was talking to the president.

We saw just today as a matter of fact the defeat in the Senate of the House Republicans’ favored alternative, cut, cap and balance. No one thought that was going to pass the Senate. And certainly President Obama wouldn’t sign it into law. But the thinking was, okay. Let the House Republicans have their vote on this really, really far-reaching package that would shrink government to levels not seen since after World War II, and then they’d get it out of their system and their leaders would be able to compromise.

Well, it went down to defeat in the Senate. But what also happened is that Senate Majority Leader Reid and Senate Minority Leader McConnell also effectively shelved their own alternative to get a staged increase in the debt limit.

So with those two alternatives just today going down in effect, you know, I don’t know what alternatives Speaker Boehner has in mind.

MR. HARWOOD: What you saw in the president’s press conference tonight was an attempt to set the terms for this fallback end stage option. The House Republicans want to do a short-term deal, a couple of hundred billion in increase in the debt limit in exchange for spending cuts, dribble it out for a period of months at a time and keep doing it. The president wants it through the election. What he was hammering them at his press conference tonight and saying, I’ve proven I will compromise; they will not.

MS. IFILL: They won’t take yet for an answer he kept saying over and over.

MR. HARWOOD: They won’t take yes for an answer. The polls show independent voters increasingly are agreeing with the president on that. He is trying to maximize the pressure on them for cutting a longer term deal through the election.

MS. IFILL: Naftali, you’ve been following this fairly closely. Is there a path that I fail to see toward a compromise anymore?

MR. BENDAVID: I think if you listen to what people say, there pretty much is no path at this point. I mean, somebody’s going to have to give on something because the president says he insists on a deal that takes us through the election. And that’s a $2.4 trillion debt limit increase. Boehner says if that’s going to happen, he needs $2.4 trillion in spending cuts. How that’s going to happen without revenue that’s already been ruled out – I mean, it seems like they’ve tried all the pathways that are not just obvious but even the less obvious ones.

So something is going to have to give. And it’s really not clear what it is. The most obvious one would be a shorter term deal. And maybe if the president’s presented with that or having the government default, he’s going to have to accept it. But short of that, it’s hard to see what the agreement would be.

MS. IFILL: Dan, how delicate a process has this all been, because, you know, we’ve seen our share of these kinds of negotiations. And I think there’s a certain – I think even the markets seem to think, oh, they’ll figure it out at the end. But here we are tonight and we don’t see a way that they figure it out. Has this really been – has this been more high stakes than we thought?

MR. BALZ: It certainly has been. And I think that as a result of what happened late tonight, I mean, we are now in a very dire situation I think, because, as Naftali says, there’s no obvious way forward. These folks have been negotiating for many, many, many days, weeks. They’ve tried a lot of different options. And now they’re back to – starting over again on this. So that’s a huge problem. I think it is tough a function of the fact that we are in this era of polarized government in which whoever wins the last election believes they have a mandate to do what they said they were going to do in the election, even if they don’t control the whole government. And so, a divided government does require compromise, particularly at a moment like this. And it’s not clear which side is prepared to really make the real concession to get it done.

MS. IFILL: Dan, you’ve been talking to the governors and, John, you’ve been out in Iowa. You’ve been all over the place. You’ve been talking to people who actually live outside of Washington and they’re watching this with some consternation. Do they think everyone has lost their minds or does this even penetrate? Does this trickle down in any real way to people?

MR. HARWOOD: Well, different reaction depending on the audiences. We had an NBC-Wall Street Journal poll this week. And what it showed was that three-quarters of Democrats say their members, their leaders in Congress should compromise with the Republicans. Three-quarters of independents said Democrats should compromise.

Different story on the Republican side – you had a large majority, almost 70 percent of independents say, Republicans, you need to compromise. Most Republican rank-and-file members said, don’t compromise, stick to your guns. That’s what’s being reflected in the House Caucus. Now, independent voters matter next November. But we’ve got primary elections in the meantime, including for president.

I was out in Iowa early this week with Tim Pawlenty, who’s running, and was talking to his aides about as he makes his bus tour across Iowa – one of his aides said to me, you think that he’s hearing from Republican voters that we ought to raise the debt limit? Absolutely not. And that’s why you heard Michele Bachmann this week saying, I will not vote to raise the debt limit, absolutely. All of these polarized pressures that Dan mentioned from the bases of the two parties make it more difficult to get a deal.

MS. IFILL: But I was interested what you wrote about the governors this week. They’re making really painful choices which in some cases go against what they ran on in order to balance their budget. So they watch this and they think what?

MR. BALZ: They think Washington has to get its act together – I mean, for two reasons. One, I had a very interesting interview with the governor of Washington, Christine Gregoire, who’s the outgoing head of the National Governors Association. And she just went through a very difficult period to balance her budget. And she said, I’ve made rotten decisions. I’ve just been through a period in which I had to make rotten decisions. I said, well, what do you mean by that? She said, I basically am undoing much of what I’ve tried to do in my earlier years in office. And I have done things that I know are going to hurt people, but we simply had to do it.

What governors are worried about is two things: one is parochial, that whatever cuts Washington makes will trickle down to the states and they’re going to have to make more cuts. More significantly, they are worried that the uncertainty that we are seeing right now and the potential for the default will deal a terrible blow to their state economies which, as they say, are in a very fragile state right now. And as they talk to business people in their states, whether they’re Republican or Democratic governors, they’re hearing the same thing, that they want something done in Washington that gets us through this period safely.

MR. HARWOOD: Is it possible that Republican governors could become a source of pressure on the Congress to make a deal with the president?

MR. BALZ: Well, maybe – that may be more than they’re prepared to do, but it was interesting. The governor of Virginia, Bob McDonnell, who, when I talked to him a week ago, was basically taking a very hard line.

MS. IFILL: He also has a surplus in Virginia.

MR. BALZ: Yes. And he said, we did it without raising taxes. And he said Washington ought to try to do the same. This week he sent a letter to the White House basically saying, get a deal done. Now, he said he still thinks it ought to be done with mostly spending cuts but he also said he has been warned that the states’ bond rating could go down if the federal debt limit isn’t extended. And so he’s got a very deep personal interest. So he’s basically saying, look, however I – I’m not going to tell you how to do it. Just do it.

MS. IFILL: Well, that’s why we started hearing John Boehner this – just yesterday talk about the federal credit rate – the credit rating for the federal government and worrying that a deal – they all seem to agree a deal has to be done, yet the atmosphere, Naftali, seems as toxic as it’s ever been.

MR. BENDAVID: I mean, I’ve never seen anything like it. And people who’ve been around Congress for a long time say there’s never been anything like it. I mean, of course, there’s always a vitriol. There’s always partisanship. But the level of rhetoric, the inflammatory way that people are talking, and simply the fact that people don’t seem willing to give or compromise at all I think is something striking.

And particularly as we’re approaching what everyone agrees – or almost everyone – is an economic precipice to still have no movement at this stage of the game is something really amazing. I think all of us thought by now we would no longer be talking about this. They would have figured it out somehow.

MS. IFILL: We hoped actually.

MR. BENDAVID: We hoped. And I think to some degree, at least I certainly thought it would be over by now. But there is something about the last election that was different from previous elections it seems to me, which is a lot of the Republicans were elected not only based on what they thought but as they saw it, with a very specific narrative that the problem with the Republican Party had been that it had compromised too much. So it’s not just that they were elected on small government platforms, but also with the idea that compromise was sort of inherently a weak and corrupting thing to do. And I think that’s part of why we’re here.

MS. IFILL: Jackie, let me ask you to address that from the White House and Pennsylvania Avenue because the president in coming out today abandoned all effort to be the cool, collected Obama. He decided to let you see that he was a little bit mad, that he was ticked off, that he prefers to have his phone calls returned when he calls the speaker. Was that very much on purpose? Did the White House decide it’s time to take off the gloves and show our not just exasperation but anger at the process?

MS. CALMES: I think it was both. I think, you know, part of it was stagecraft but part of it was probably really real. You know, we’ve reached a point where the ramifications of this weren’t so bad in default, if the stakes weren’t so huge, the White House might actually be getting to the point where they would be enjoying this.

The polls are showing that more Americans have started to pay attention to this issue. You have fewer people saying that default doesn’t worry them. And certainly if it happens they’ll find out that they should have been worried. I think he’s in a good position. I mean, he’s in the middle. Independents like what – politically speaking he’s in a good position.

There’s no question – when we lay out what we already know, and we’re going to learn more, he has compromised far more than Democrats ever won. You should see the e-mails I get from Democrats who are just so angry with him. But there’s still – for all that remains little question that he could have brought his party along to a, quote, unquote, “balanced” deal.

And the Republicans have not shown similar give. And it’s just that those are just the facts right now and it goes to what Naftali said about the election we just had. I was here in the ’80s with the Reagan revolution and then the Gingrich revolution in the ’90s. There was a lot of compromise in the ’80s. There wasn’t the ideological rigidity. In the ’90s it got a little more so, but there still ultimately were compromises. This is a new group and it’s – you know, like he said, they just don’t see the political or substantive value in compromising on a question so fundamental to them as taxes.

MR. HARWOOD: Jackie, Naftali was talking about the fiery rhetoric and there was some suggestion from both sides today, especially from Speaker Boehner that there had been a double cross, that the goal post had been moved and that sort of thing. I’ve got to tell you, from my perspective it looks to me like a straight up ideological disagreement over the size and role of government –

MS. CALMES: Absolutely.

MR. HARWOOD: – over how much government we can afford and should afford. And it wasn’t really about personal good will. It seemed to me that the leaders were trying to work it out and they found they just couldn’t get the votes. Do you agree with that or do you see a double cross by either side?

MS. CALMES: I actually think, you know, it pains John Boehner greatly to walk away from the table and it pains President Obama to walk out to the White House briefing room to have to say the things he did tonight. But that’s what makes it so hard to see the way out of this. And the only way I can see out of this is there’s no question ultimately you have to increase the debt limit. So in return, do you get just – President Obama’s already admitted another concession that he would be willing to take a smaller deficit reduction package, only spending cuts in return for a shorter debt limit increase.

MS. IFILL: Well, let me ask everybody around the table as we shockingly run out of time, to talk about what our next deadlines are. The president said today before the stock market opens on Monday, we’ve got to do something. We know what the August 2nd deadline is. We’ve seen them walk right up to the lip of this before and then back away. What is the realistic deadline?

MR. BENDAVID: I mean, I think they are running out of time. It seems pretty clear that by the end of the weekend they’ve got to have something. And part of that’s because of the markets. Everybody’s very afraid that when the markets open on Monday they’ll plummet if a deal hasn’t been reached or at least a framework or some path forward. But there are also legislative deadlines because there are certain things the House of Representatives and the Senate have to do. They can’t just turn around and pass a bill the second they think of it. So for both of those reasons it seems like they’ve got to have something by Sunday night.


MR. BALZ: I have been told by people at the White House that they thought if this deal was going to come together, it likely would have come together on Monday, which would have given the speaker enough time to –

MS. IFILL: This coming Monday.

MR. BALZ: This coming Monday, to get it on the floor by Wednesday without people being able to flyspeck it too much basically. But I think that because of what happened tonight, I think the deadline may be a little earlier to try to show some progress.

MS. IFILL: Okay. Well, thank you all very much. This is breaking news tonight. And it’s been very interesting to figure out what it all meant. And, Jackie, thank you for taking a break there from filing your story in the newsroom.

MS. CALMES: Thank you.

MS. IFILL: We have to end the conversation here but it continues online where we’ll talk about other things as well, including the “Don’t Ask, Don’t Tell” repeal today and the Murdoch scandal. You can find the “Washington Week Webcast Extra” at Keep up with daily developments including continuing fallout from the terrorist attacks in Norway online and on the air at the PBS “NewsHour.” And we’ll meet you again right here next week on “Washington Week.” Good night.