McConnell Offers Debt Ceiling Out, But Obama Keeps Focus On Deficit

McConnell Offers Debt Ceiling Out, But Obama Keeps Focus On Deficit

WASHINGTON -- There were no real signs of progress in Tuesday's White House debt talks. But the meeting did shed light on two evolving dynamics taking place in the ongoing negotiations: President Barack Obama's increasing appetite to cut spending in a substantial way, and Republicans sinking under the weight of their own hard-line approach to a deal.

For all its talk of the importance of averting a debt default, the White House is signaling that major deficit reduction has become more than just a bargaining chip to bring Republicans aboard a debt deal.

Treasury Secretary Timothy Geithner opened Tuesday's meeting not by focusing on the perils of debt default, but instead with a "vivid" presentation on "what happens if you don't cut the deficit," according to a Democratic source familiar with the talks.

Geithner warned the group that ratings agencies are actively watching both the debt ceiling debate and the ability of Congress to turn around the nation's growing deficit and debt. He pointed to the economic unrest in Europe as evidence of what could happen in the United States if the White House and Congress don't tackle the deficit in a serious way.

Lawmakers obviously discussed the pressing consequences of debt default, said the Democratic official. And on that front there still "continues to be a big difference on revenue."

But as negotiations on a debt package resumed, Obama made it clear that he isn't playing small ball. He warned Republicans that the major concessions he has offered on entitlement reforms are off the table if they don't agree to a sizable debt deal. There could still be some tinkering with Medicare and Medicaid, he told the group, but it would come from the supplier side, not the benefit side.

Throughout the meeting, the president urged Republicans to reconsider the benefits of passing a bigger package, which now seems likely to fall somewhere between the $4 trillion that Obama wanted and the $2.4 trillion that Vice President Joseph Biden targeted in his now-defunct bipartisan deficit group. Whether entitlement reforms remain part of that equation is undetermined. But Democratic negotiators reiterated that even the low end of that deal would have to include a revenue component.

The partisanship simmering beneath the talks also appeared to wane somewhat on Tuesday. Another Democratic official with knowledge of the meeting described it as "more constructive than the other ones," adding that there was a "general consensus about the need to stop talking past each other."

Congressional leaders are headed back to the White House on Wednesday at 4 p.m. to "begin trying to go officially through the stuff in the Biden discussion."

An alternative debt plan floated earlier Tuesday by Senate Minority Leader Mitch McConnell (R-Ky.) "was brought up" during the meeting, the official added. "But it was sort of pushed to the side" as attendees focused on areas of agreement on spending cuts and revenue reforms discussed in Biden's group.

McConnell's proposal crashed and burned within his own party almost as soon as it was unveiled. Under his proposal, Congress would give up its power to raise the debt ceiling and effectively transfer that authority to the White House for the remainder of Obama's current term. Conservatives immediately trashed the idea and accused McConnell of capitulating in the debt debate. The conservative blog RedState even called on supporters to send McConnell a weasel -- and provided a link to a toy weasel on -- as "a testament to his treachery."

A top Senate Democratic aide said many view McConnell's proposal as "a pretty cynical ploy" aimed only at protecting Senate Republicans from having to make tough political votes on raising the debt.

McConnell made "a miscalculation given the violent reaction on the right," said the aide, and the proposal is "probably a nonstarter since it doesn't seem like it has any chance of passing the House."

Speaker John Boehner (R-Ohio) wouldn't outright endorse or dismiss McConnell's proposal during a Tuesday interview on Fox News, calling it one of several "backup" measures that Republicans have discussed if negotiators can't reach an agreement.

"I think Mitch has done good work," Boehner said.

But some House Republicans balked as they learned details of McConnell's proposal.

"Don't know what in the world McConnell in the Senate is thinking. Wow. Stupid idea," Rep. Jason Chaffetz (R-Utah) tweeted Tuesday evening.

And McConnell's offering only added to the GOP's mixed messages on where they draw the line in the debt debate. As Politico's David Rogers wrote, McConnell's move put on full display how Republicans are beginning to look "for an escape path from the default showdown they helped create."

Adding to McConnell's woes, the White House publicly embraced his proposal late Tuesday, a move that will likely further alienate the GOP leader from conservatives in his flank.

"Senator McConnell's proposal today reaffirmed what leaders of both parties have stated clearly, that defaulting on America's past due bills is not an option," White House Press Secretary Jay Carney said in a statement

"The President continues to believe that our focus must remain on seizing this unique opportunity to come to agreement on significant, balanced deficit reduction. As the President has said, 'If not now, when?' It is time for our leaders to find common ground and reduce our deficit in a way that will strengthen our economy."

Beyond that, other sources familiar with the meeting signaled that not much came of Tuesday's huddle. One Democratic aide said House Minority Whip Steny Hoyer (D-Md.) said that negotiators need to go big with their compromise; another source called the meeting "sleepy." Democratic leaders reiterated that Medicare cuts are not acceptable, while Boehner pressed Obama for details on a scored White House budget plan.

A senior House GOP aide noted that, at one point, Boehner urged Obama and Democratic leaders to support amending the Constitution with a balanced budget amendment, an idea backed by conservatives. But the White House resoundingly shot down that suggestion last week.

Staff to respective parties were set to coordinate on consensus areas of cuts late Tuesday night.

Mike McAuliff contributed to this report.

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