Obama, lawmakers still divided over debt deal

By Karoun Demirjian

Sunday, July 10, 2011 | 10:41 p.m.

WASHINGTON - Working the weekend only seems to have gotten the parties that are supposed to be steering the country clear of default stuck mid-turn on one, two-pronged issue: taxes and terms.

Republicans want to be sure that the revenue plan is revenue-neutral, even tax-lowering for people at every income level. Democrats, meanwhile, are loath to authorize cuts to public programs -- namely, entitlements like Medicare and Social Secuirty -- that count the needy among their beneficiaries without first taking away subsidies and tax credits that exist for the wealthy and corporate assets.

And then there’s Obama, who wants to cut a deal -- kind of a big deal -- that will ensure he doesn’t have to deal with this particular bit of the recession recovery mess again before voters choose who will be in the White House for the next four years.

It’s a monkey wrench that’s challenging the process of resolving this standoff before doomsday -- in this case, Aug. 2, when Treasury Secretary Tim Geithner says the U.S. will start to default on its loans absent more borrowing authority.

It’s not that the country hasn’t recently experienced pre-doomsday panic before. There was plenty of it just this spring, when the economic crisis before lawmakers was how to make cuts to the fiscal 2011 budget and avoid a government shutdown.

That fight was primarily between Senate Majority Leader Harry Reid and House Speaker John Boehner, and they were willing to cut a string of short-term deals.

But there’s no question at this point that this process is very much being driven by the president and the House Republican team, which is now offering a short-term deal -- but Obama doesn’t want it.

So what’s happening? Well, it’s similar to what we saw when it was Reid v. Boehner: Obama’s taking to the stump to deliver his assessment of the hurdles and hangups in the debt limit debate directly to the public just before he, the vice president and congressional leaders meet again Monday afternoon.

The president does not usually directly brief the press more than every few months, but Monday’s 11 a.m. press conference will be the third time he’s directly address to the media in less than two weeks.

Obama’s expected to explain why he won’t pledge to meet the Republicans’ demand for no new taxes -- and try to swing the pendulum of public opinion toward his stance on the merits of targeted tax hikes to help the negotiators meet their number.

The understanding behind a deal all along -- or since everyone involved acknowledged that a clean lift of the debt ceiling wasn’t likely -- is that spending cuts have to outweigh increased borrowing authority in any deal they strike.

The president wants this deal to last through the election, and has reportedly threatened to block any deal of less that raises the debt ceiling by less than $2 trillion. That means the deal that Vice President Joe Biden’s group was hashing out -- a $2 to $3 trillion plan that Boehner suggested could be the blueprint for a final agreement -- is within the window of possibility.

But those talks never achieved any concrete resolution, and Republican participants Eric Cantor, Boehner’s deputy in the House, and Jon Kyl, the party Whip in the Senate, backed out of the dealmaking last month, complaining then, as now, that the White House and Democrats wouldn’t pledge not to raise taxes as part of the equation.