Bipartisan Deficit Solution Now Rests With Obama and Boehner

WASHINGTON -- With Vice President Joseph Biden's bipartisan deficit talks suddenly unraveling, all eyes are now turning to the two people ultimately responsible for resolving the partisan standoff on spending and taxes: President Barack Obama and Speaker John Boehner (R-Ohio).

House Majority Leader Eric Cantor (R-Va.) caught many off guard Thursday by pulling out of Biden’s group, which has been meeting frequently since May 5 to hammer out a massive bipartisan deficit reduction package. Cantor said in a statement that while Biden “deserves a great deal of credit” for leading discussions, the group is at an impasse on taxes that only their bosses can sort out.

“Regardless of the progress made, the tax issue must be resolved before discussions can continue," Cantor tweeted shortly after bowing out of the group. "The House doesn't support tax increases."

Aides in both parties said it should come as no surprise that Biden’s deficit group could only carry negotiations so far.

“Everyone knew at some point the hot potato would get passed to the President and Boehner,” said one senior Democratic aide. “No one wants responsibility for cutting the deal that increases revenue. Even though they know it has to happen.”

The aide added, “I don't know how it ends.”

A top Republican aide concurred that “the assumption has been for months” that Obama and Boehner would have to take over and reach the final deal. The good news, the aide said, is that Biden’s group already pored over the budget and did much of the legwork.

“The group has found trillions in spending cuts,” said the aide, “and there is a blueprint in place for them.”

But the real test will be how Obama and Boehner reach an agreement on whether -- and how much -- to factor tax hikes into the mix of options as they aim for $2.4 trillion in cuts over ten years. Democrats have insisted that revenues be part of the mix, while Republicans say now is not the time to raise taxes, given the shaky economy. House GOP leaders also say they simply don’t have the votes to pass tax increases.

Alternatively, Republicans have called for making cuts to Medicare programs as a way to bring down the deficit, a proposal that Democrats say is off the table.

Senate Minority Whip Jon Kyl (R-Ariz.), the only other Republican attending Biden’s meetings, also pulled out of Thursday’s scheduled meeting and cited the same concerns as Cantor.

“The White House and Democrats are insisting on job-killing tax hikes and new spending. That proposal won’t address our fiscal crisis, our jobs crisis, or protect and reform entitlements,” Kyl said in a joint statement with Senate Minority Leader Mitch McConnell (R-Ky.).

“A bill with new spending and higher taxes would fail with bipartisan opposition - as it should. President Obama needs to decide between his goal of higher taxes, or a bipartisan plan to address our deficit. He can’t have both. But we need to hear from him.”

White House Press Secretary Jay Carney maintained that debt talks are merely in a state of “abeyance” and that things are moving along as planned.

"It has always been the case where these talks would proceed to a point where the remaining areas of disagreement would be addressed by leaders and the president,” Carney told pool reporters aboard Air Force One. “I don't have any announcement about what happens next, but this process is sort of proceeding as envisioned.”

Carney said Obama and Boehner met Wednesday night at the White House “to discuss a variety of issues,” but he wouldn’t elaborate. Carney also wouldn’t say if Boehner gave Obama a heads-up about Cantor planning to leave Biden’s group, but he said Cantor called the vice president today before he announced he was leaving the talks.

The White House spokesman reiterated that Obama supports “a balanced approach” to reducing the deficit, meaning tax hikes as well as spending cuts. “He does not support an approach that provides for a $200,000 tax cut for millionaires” while simultaneously cutting Medicare programs to achieve savings, Carney said.

Senate Majority Leader Harry Reid (D-Nev.) knocked “the non-adult attitude of Sen. Kyl and Leader Cantor” and said it is now up to top Congressional leaders to get the job done.

"I think it's now, with what Kyl and Cantor's done, I think it's in the hands of the speaker and the president and sadly, probably, me,” Reid said.