Obama Vows 'Hard Choices' on Debt
President Barack Obama insisted Friday he was prepared to make ``tough choices'' for a sweeping deficit-reduction deal to avert a U.S. default, despite Democrats warning him not to make too many concessions.
With the deadline to raise the U.S. debt ceiling just 11 days away, the Democratic president appealed for compromise by both parties as he and the top Republican in Congress, House Speaker John Boehner, pursued a plan for up to $3 trillion in spending cuts.
``I'm willing to sign a plan that includes tough choices I would not normally make, and there are a lot of Democrats and Republicans in Congress who I believe are willing to do the same thing,'' Obama said at a town hall-style meeting at the University of Maryland.
While an agreement did not appear imminent, Obama faced increasingly vocal complaints from his own Democrats on a deal-in-the-making that could mean painful curbs in popular health and retirement programs but no immediate increase in taxes.
``I've never seen frustration higher,'' Democratic Senator Dianne Feinstein said after a week of chaotic efforts to sort through conflicting options and stave off a devastating default on the nation's financial obligations.
Negotiations between Republicans and the White House toward a deal to raise the $14.3 trillion limit on America's borrowing are at a critical phase. The world's biggest economy will run out of money to pay its bills without a deal by Aug. 2, the administration says.
Obama maintained it would be impossible to achieve the kind of ``historic'' deficit-reduction deal he is seeking without including revenue increases through such measures as reforming the tax code and ending tax breaks for wealthier Americans.
But congressional sources have said the deal now being crafted with Boehner might leave tax reform and other major revenue-boosting steps for later.
CREDIT RATING AT RISK
Republicans and many Democrats are refusing to raise the debt limit unless it is accompanied by steep spending cuts to tackle rising budget deficits. An unprecedented national default could push the United States back into recession and trigger global financial chaos.
Treasury Secretary Timothy Geithner met Federal Reserve Chairman Ben Bernanke and New York Fed President William Dudley to talk about the implications for the U.S. economy if Congress failed to raise the debt ceiling. They remained confident Congress would act in time, they said in a joint statement.
The hope in Washington is that a wide-ranging, 10-year package of deficit cuts being worked out will be enough to save America's triple-A credit rating.
``We have never defaulted on our debt and we're not about to do it now,'' Obama said. But he warned lawmakers that if they failed to act on the debt limit ``every American will suffer.''
Casting himself as a centrist compromiser, Obama is trying to appeal to moderate independent voters he needs to win re-election in 2012. Polls show they are concerned not only about stubbornly high unemployment but ballooning deficits.
Still the sides remain far apart, with Boehner saying a deal is not close and tough negotiations lie ahead. `` It is going to be a hot weekend here in Washington D.C.,'' he said.
With Congress out of session on Saturday and Sunday, any action was expected to continue behind the scenes.
Boehner told fellow Republicans that the House will need to pass debt-ceiling legislation by Wednesday to give the Senate enough time to pass it by the August deadline, according to an aide. There are doubts, however, that such a time frame can be achieved.
Obama and Boehner took discussions on a so-called ``grand bargain'' behind closed doors this week. Talks have whipsawed and stalled over raising tax revenue, which Democrats insist must be a part of any spending cut deal while Republicans reject tax increases.
Senior Democrats in Congress, who have been kept out of the White House talks, were furious that Obama might concede to a deal with no new tax revenue, but with spending cuts in Medicaid, Medicare and Social Security, ``safety net'' programs for the poor and elderly long championed by their party.
Senate Democratic leader Harry Reid warned Obama to ``be careful'' what he agrees to with Boehner, who is under pressure himself from Tea Party movement conservatives in his party.
As the clock ticked down, the Democratic-controlled Senate rejected a Republican measure to drastically cut and cap spending and create an amendment to the U.S. Constitution requiring a balanced budget.
The vote was largely symbolic but it gave fiscal conservatives a forum to argue for deep cuts and could give Boehner political cover to push forward on a deal with Obama.
In another sign the Obama-Boehner track was seen as the path forward, Reid said the Senate would put off considering a fallback plan put forth by Senate Republican leader Mitch McConnell and wait to see what emerged from the talks.
More details emerged about the roughly $3 trillion deal under consideration. Broad cuts in discretionary spending, including defense, would be spelled out over 10 years, whereas tax reform and changes to entitlement programs would be felt in 2013 or later because it takes time for Congress to write the new laws.