President Barack Obama urged Republican leaders to compromise on their opposition to tax increases and achieve "the largest possible deal" to cut the federal budget deficit.
Obama said he won't agree to a short-term extension of the government's debt limit and plans to continue meeting with members of Congress every day until an agreement is reached.
"I will not sign a 30-day or a 60-day or a 90-day extension — that is not just not an acceptable approach," Obama told a White House news conference before resuming talks Monday afternoon with bipartisan congressional leaders toward a compromise on reducing deficits and raising the $14.3 trillion federal debt ceiling before the government exhausts its borrowing authority on Aug. 2.
"Now is the time to deal with these issues," Obama said. "If not now, when?"
As the 2012 election gets closer, partisan differences will only grow harder to resolve, he said. "We might as well do it now — pull off the Band-Aid, eat our peas."
House Majority Leader Eric Cantor said Republicans "didn't come here to raise taxes," saying any agreement "has got to be revenue-neutral" and not increase the government's income.
No Tax Increases
"Barack Obama wants to raise taxes, and Republicans don't," Cantor of Virginia told reporters in Washington after Obama spoke.
Obama called on Republican leaders to show flexibility, saying he has "bent over backwards" to accommodate the other party in deficit talks.
"I'm prepared to take on significant heat from my party to get something done, and I expect the other side should be willing to do the same thing, if they mean what they say," Obama said.
He chided Republican leaders for focusing on a smaller package of cuts than the goal Obama has set of trimming $4 trillion from the deficit, saying their posture doesn't square with Republican rhetoric that casts debt reduction as "a moral imperative."
If changes to Social Security are included in a bipartisan deal, Obama said they should only be aimed at strengthening the retirement system rather than reducing the deficit.
"Social Security, if it is part of a package, would be an issue of, how do we make sure Social Security extends its life and is strengthened?" Obama said. The reason to address the retirement system for the elderly during current bipartisan talks, Obama said, is that "if you're going to take a bunch of tough votes, you might as well do it now."
The president said an agreement on spending won't be enough by itself to get unemployment back to pre-recession levels, yet would have a "positive impact" on growth and employment.
Obama and congressional leaders made little progress in talks Sunday night, a day after House Speaker John Boehner said all sides must settle for a smaller plan. Obama said he appreciates Boehner's "good-faith efforts" to negotiate toward a significant deal, and called on Republicans to bring a proposal that can pass Congress.
The parties are divided over taxes and entitlements. Republicans have rejected Democrats' calls for more tax revenue and instead are pressing to cut entitlement programs such as Medicare and Social Security.
Taxes versus entitlements
Democrats say even the Republicans' proposal for a smaller deficit-cutting plan must include more taxes from higher-income Americans. Obama has said he is willing to cut entitlements in exchange for a Republican agreement to increase taxes.
The benchmark Standard & Poor's 500 Index dropped 1.75 percent to 1,320.27 at 1:15 p.m. Monday in New York. The Dow Jones Industrial Average fell 1.26 percent to 12,497.63.
Treasury 10-year yields slid to the lowest level this month, dropping eight basis points, or 0.08 percentage point, to 2.95 percent at 12:41 p.m. in New York, according to Bloomberg Bond Trader prices.
The White House isn't seeking any tax increase before 2013, Obama said. The tax increases he is seeking would target "millionaires and billionaires" and "corporate loopholes," he said.
Democratic officials have said Obama is aiming at tax breaks for corporate jets, oil and gas subsidies, carried- interest income of hedge fund managers and "last-in, first- out" inventory accounting.
'Baffling' tax increases
Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell of Kentucky, underscored Republicans' opposition to any tax increases, in a statement after Sunday night's meeting.
"It's baffling that the president and his party continue to insist on massive tax hikes in the middle of a jobs crisis while refusing to take significant action on spending reductions at a time of record deficits," Stewart said.
On July 9, Boehner, an Ohio Republican, said following a phone conversation with Obama that, amid the stalemate over taxes, all sides must settle for a smaller plan than the president seeks. Before yesterday's White House meeting, Obama said "we need to" reach an agreement within the next 10 days.
During the meeting, Obama said he believed a bigger deal might be politically easier, with both sides making philosophically difficult concessions, said a Democrat familiar with the discussions. The president asked Republicans to return Moday with details of their proposal, including numbers, the person said.
Beyond 2012 election
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Boehner and the president had both been aiming for a larger compromise that would extend the debt ceiling through the next election in 2012. House and Senate Republicans are insisting that spending cuts exceed any increase in the debt ceiling.
Republicans including Cantor, a participant in previous bipartisan debt talks led by Vice President Joe Biden, say that group had identified between $2 trillion and $2.5 trillion in spending cuts that could serve as a framework for an agreement between Obama and congressional leaders.
Democrats, including Maryland Representative Chris Van Hollen, who participated in the Biden effort, say Democrats never agreed to that amount without new revenue in the mix.