Obama, Biden plan debt session with Senate Dems

By Jim Kuhnhenn

Associated Press

Published: Tuesday, June 28 2011 12:00 a.m. MDT

WASHINGTON — At least they're still talking. While President Barack Obama and congressional Republican leaders have publicly dug in their heels on critical debt-limit negotiations, Obama's spokesman said Tuesday the president and Senate GOP leader Mitch McConnell will continue discussions.

Obama and Vice President Joe Biden spent more time in the Oval Office on Monday with McConnell than they did with a fellow Democrat, Senate Majority Leader Harry Reid. The president and vice president have scheduled another meeting for Wednesday to consult with Reid — and also invited Sens. Dick Durbin and Charles Schumer, both members of the Democratic leadership team.

The White House did not announce a new meeting with Republicans. But Obama spokesman Jay Carney called the meeting with McConnell "useful" and said that "importantly" they agreed to continue meeting.

"They will continue to talk," McConnell spokesman Don Stewart had said after the meeting.

But about what? To be sure, neither McConnell nor Obama is fond of small talk.

Obama and Democrats insist that for there to be a deal on reducing long-term deficits, any agreement must include some tax increases on the wealthy or on corporations, mostly through closed loopholes. But before McConnell even walked into the white House, he had flatly rejected tax increases.

"It's time Washington take the hit," he said, "not the taxpayers."

That would seem to put a damper on the conversation. But the deal is crucial to winning congressional support for raising the government's borrowing limit, a step it must take by Aug. 2 to avoid a potential default. The current debt ceiling of $14.3 trillion would likely have to be increased by $2.4 trillion to last through the end of next year.

Republicans want an equal amount in deficit reduction over the next 10 years and say they cannot support increasing the debt ceiling without a budget deal at the same time.

"Compromise and an agreement will depend on each side being willing to accept some tough choices," Carney said Monday.

Failure to raise the ceiling "would do serious damage," said Mark Zandi, chief economist at Moody's Analytics, whose views are frequently cited by the Obama administration. "It will unhinge the already very fragile collective psyche."

But Zandi said that if Republicans are being asked to give up their deep-seated opposition to tax increases, then Obama needs to sacrifice as well by abandoning a major campaign promise, such as his demand that Congress end Bush-era tax cuts for wealthier Americans.

Another option is for Obama to propose his own plan for further savings in Medicare. Republicans might find that appealing after the House Republican plan ran into broad public opposition and became a campaign issue for Democrats.

"The president needs to take a chance himself, and do something that shows he's willing to give up something that's very large to move this forward," Zandi said in an interview.

The president stepped up his personal involvement in negotiations after bipartisan talks led by Biden stalled last week. Republican lawmakers abandoned the negotiations, saying the issues still on the table had to be addressed by the president.

Obama already has met privately with House Speaker John Boehner, R-Ohio, and with House Democrats.

Until Friday, Biden had held a series of meetings over several weeks with bipartisan teams from the House and Senate, focusing on areas where the two sides were amenable to cuts until the dispute over taxes led Republicans to walk out.

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