By Lori Montgomery
House Majority Leader Eric Cantor pulled out of debt-reduction talks with the White House on Thursday saying the effort has reached an impasse over taxes that can be resolved only by President Obama and House Speaker John A. Boehner (R-Ohio).
In a statement Cantor (R-Va.) said he remains optimistic about the talks led by Vice President Biden which have identified trillions in spending cuts" and established a blueprint that could institute the fiscal reforms needed to start getting our fiscal house in order."
However a three-hour bargaining session Wednesday was highly contentious and failed to make headway as Democrats pressed repeatedly for Republicans to accept provisions to raise taxes according to participants in the talks.
The Vice President deserves a great deal of credit for his leadership in bringing us this far" Cantor said in the statement. We have worked to find areas of commonality to meet the goal of identifying spending cuts commensurate with or exceeding the amount of the Obama Administrations request for a debt limit increase. ...
That said each side came into these talks with certain orders and as it stands the Democrats continue to insist that any deal must include tax increases" Cantor said. Regardless of the progress that has been made the tax issue must be resolved before discussions can continue."
Cantor said he would not participate in a meeting set for Thursday afternoon saying I believe it is time for the President to speak clearly and resolve the tax issue." Once that issue is settled he said we have a blueprint to move forward."
Top Republicans said the conversation between the two leaders has already begun and that Boehner met Obama at the White House late Wednesday at Obamas request. It was not immediately clear what the two men discussed but neither man was apparently aware at the time of Cantors decision to pull out of the debt talks.
Senate Majority Leader Harry Reid (D-Nev.) said he was disappointed that Cantor decided to drop out at such a crucial time."
I guess he wanted to meet directly with the president" Reid said. Maybe that was part of the original plan that hed go so long and then turn it over to Boehner."
Cantors announcement which was first reported by the Wall Street Journal broke as House Democrats were meeting with Obama at the White House. They too are anxious to know where the president stands on taxes and are urging him to fight for as much as $400 billion in fresh revenue as part of the debt-reduction package according to Democrats familiar with the talks.
In a meeting Thursday morning House Minority Leader Nancy Pelosi (D-Calif.) and other senior House Democrats pressed Obama to commit to a significant tax increase as part of the emerging deal which is intended to reduce borrowing by as much as $2.4 trillion over the next decade according to senior Democratic aides.
Congressional Republicans have emphatically rejected any move to raise taxes arguing that such a package could not pass the House and would invite a filibuster in the Senate. But Democrats in both chambers say they cannot support deep cuts to programs that benefit low- and middle-income Americans unless wealthy households are also forced to make sacrifices to restrain the nations spiraling debt.
As the Biden talks have progressed since May 5 congressional Democrats have grown increasingly concerned that the White House is more interested in cutting a deal that will satisfy Republicans than in ensuring that the final package contains a balance of spending cuts and revenue increases.
House Democrats are pressing for a package of revenue provisions that would eliminate a variety of tax breaks for corporations and the wealthy including oil and gas companies and hedge fund managers. They have also proposed to cap the value of deductions for households earning more than $500000 a year at 10 percent of adjusted gross income according to people familiar with the talks a variation on a proposal by Martin Feldstein a Harvard economist who was a top economic adviser in the Reagan administration.
The government risks defaulting on its obligations unless Congress acts to raise the legal limit on government borrowing by Aug. 2; the debt-reduction package is aimed at persuading reluctant lawmakers to approve the legislation.
Reid said Thursday that he feared the Republicans are playing a game of chicken" with the deadline. If they dont work to cooperate to get something done the harm for this country and the world will be very significant. And thats on their conscience" he said.
It was not immediately clear how Cantors decision would affect the Biden talks which were expected to continue Friday and throughout next week. However those involved in the effort have long warned that final decisions about the package would be made by Obama Boehner and Reid along with Pelosi and Senate Minority Leader Mitch McConnell (R-Ky.) probably after the July 4 break.
Cantors decision might merely hasten that moment.
In a statement following Cantors announcement McConnell and Senate Republican Whip Jon Kyl (R-Ariz.) reiterated the GOP position against tax increases.
The White House and Democrats are insisting on job-killing tax hikes and new spending" the statement said. That proposal wont address our fiscal crisis our jobs crisis or protect and reform entitlements. . . President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit. He cant have both."
Asked about the next steps in the talks Boehner on Thursday said that Obama must now take a greater role if the group is to meet the deadline the White House has set for a resolution.
If were going to meet that timetable the president is going to have to engage" Boehner said at his weekly news conference at the Capitol adding: I would expect to hear from him."
Staff writers Felicia Sonmez Paul Kane and Rosalind S. Helderman contributed to this report.
