Inflexible rhetoric bogs down debt talks

WASHINGTON - In unusually blunt and combative language, the Senate's top Republican says White House offers to cut long-term spending amount to "smoke and mirrors" and directly challenged President Barack Obama's leadership in debt limit negotiations.

Senate Republican leader Mitch McConnell charged Tuesday that Democrats and the Obama administration were relying on budget gimmicks to give the "appearance of serious belt-tightening."

"After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable," McConnell said.

Mr. Obama has been pushing for $4 trillion in a 10-year deficit reduction proposal. But House Speaker John Boehner, after seeking to forge a deal of that magnitude, told the president that a smaller, $2 trillion to $2.4 trillion deal was more realistic. A deal is essential to win Republican votes to increase the nation's debt ceiling by Aug. 2, or risk a government default.

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McConnell said Republicans will "do the responsible thing and ensure the government doesn't default on its obligations."

But he dismissed the cuts the administration and Democrats have proposed as gimmicks.

His comments underscored the seemingly inflexible bargaining positions that have created an impasse between Mr. Obama and GOP lawmakers as they struggle for agreement on budget cuts as the price for maintaining the government's ability to borrow.

McConnell's remarks represent an escalation for Republicans, who had earlier acknowledged that bipartisan negotiations led by Vice President Joe Biden had managed to identify up to $2 trillion in spending reductions. Details of those cuts, however, were still being worked out.

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McConnell accused the administration of leaking its proposals for spending cuts to the media without details.

"The lack of detail concealed the fact that the savings they were supposedly willing to support were at best smoke and mirrors," the Kentucky Republican said.

Democratic officials familiar with Mr. Obama's private talks with leaders of the House and Senate insist that Congress will not let the government go into default for the first time in American history — and that Republicans, ultimately, would vote to raise the debt limit even if a deficit-cutting package does not come together over the next two weeks.

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Republicans say they won't allow a default, but that a major reduction in spending must come as part of the package — and therefore both sides remain in a stalemate on the debt limit.

After a Monday White House meeting among Mr. Obama and top congressional leaders, neither side showed any give that might generate hopes for a speedy agreement. Instead, Republicans again took a firm stand against revenue increases while Mr. Obama and his Democratic allies insisted that they be part of any equation that cuts programs like Medicare.

"I do not see a path to a deal if they don't budge, period," Mr. Obama said on Monday.

At the same time, the president turned up the pressure by announcing he won't sign any short-term debt limit increases.

"We are going to get this done," Mr. Obama insisted during a news conference.

Mr. Obama's declaration seemed aimed at pressuring lawmakers to continue to strive for the largest deficit reduction plan possible, even though hopes for a "grand bargain" mixing a complete overhaul of the tax code with cuts to benefits programs like Medicare and Social Security fizzled over the weekend.

An advocate of the bigger bargain, House Speaker John Boehner, R-Ohio, explored the idea but scotched it in its infancy after learning the extent of White House demands for tax increases.

"The American people will not accept — and the House cannot pass — a bill that raises taxes on job creators," Boehner said Monday before heading to the White House.

Rep. Paul Ryan, chairman of the House Budget Committee, expanded on the Republican opposition to tax increases.

"Here's the problem we have with this economy ... we are already taxing our job creators and our businesses more than our foreign competitors are taxing theirs. We don't want to go farther down that path," Ryan, R-Wis., told "The Early Show" Tuesday. "We want to make sure that America's job producers, our employers, are not put at a huge competitive disadvantage. And right now they're paying higher tax rates."

The Treasury Department says lawmakers have until Aug. 2 to extend the nation's debt limit to prevent a catastrophic government default on its bills. With that deadline fast approaching, the public is growing more concerned about what happens if Congress and the White House can't reach a deal.

Forty-two percent of Americans say they see a greater risk to the economy from not raising the debt limit, according to a Washington Post-Pew Research Center poll conducted last week. That's up 7 points from late May. However, there are still 47 percent of Americans who say they are more concerned about the consequences of raising the debt ceiling.

The business community is also upping the pressure on lawmakers, warning that a failure to increase the nation's borrowing limit could have an immediate impact on the economy recovery.

"An unprecedented default on the nation's bills would have dire consequences for our economy, our markets, and Main Street Americans," said Thomas Donohue, president of the U.S. Chamber of Commerce.

Despite lingering hopes for a larger deal, the goal of the White House talks is to produce spending cuts of at least $2.4 trillion or so over the coming decade. Such cuts wouldn't do enough to address deficits that threaten the economy, but they would represent a down payment on further reductions that would be imposed after next year's elections.

The $2.4 trillion figure would meet the House Republicans' own standard of a debt-cutting package: one that would exceed the size of the increase in the debt limit, and provide enough borrowing room to get the country through 2012.

The group of negotiators includes Mr. Obama, other top administration officials and a bipartisan group of the eight top leaders of Congress. At Monday's session, they heard competing versions of how much progress had been made in talks led by Vice President Joe Biden in May and June.

House Majority Leader Eric Cantor, R-Va., a participant who left the Biden talks last month because of Democratic demands on taxes, spelled out potential spending cuts that had been identified. But Democratic lawmakers made clear that such a cutting-only approach without tax increases on wealthier Americans would never pass the Democratic-led Senate or the House, where Democratic votes would be needed, too.

Cantor, aides said, outlined up to $2.3 trillion in spending cuts over the upcoming decade, with $1.3 trillion coming from squeezing the day-to-day budgets of Cabinet agencies, including the Pentagon.

Cantor erred on the high end of the savings range in virtually every instance. The White House countered that the cuts really approached $1.7 trillion or so, which would leave negotiators $700 billion short of the $2.4 trillion being sought.

After ending negotiations Monday, Mr. Obama gave lawmakers a homework assignment of sorts - to return with solutions to cover that $700 billion difference, reports CBS News White House correspondent Bill Plante.

Republicans are also suspicious that Democrats want most of the spending cuts to be concentrated in the later years of a deal. They say that despite promising cuts of $1.1 trillion from Cabinet agency operating budgets, the White House is insisting on a two-year freeze in such spending at the current level of $1.05 trillion. At issue is the amount approved by Congress each year in annual appropriations bills.

Mr. Obama spent most of his time encouraging lawmakers to reconsider a bigger deal, on the order of some $4 trillion in spending cuts and tax hikes over 10 years. Democrats familiar with the talks said it was clear after the meeting that negotiators are going to have come up with some new ideas in hopes of finding a compromise.

As a measure of the political peril Mr. Obama is courting, the president is willing to discuss raising the Medicare eligibility age from 65 to 67 years, provided Republicans would allow Bush-era tax cuts for the wealthy to expire at the end of 2012 and agree to other unspecified demands, according to a Democratic congressional aide.

All the officials familiar with the talks spoke on condition of anonymity to disclose details of the private discussions.