11 Days to Default: Capitol Hill Democrats Nervous Deal Could be All Spending, No Taxes

Approaching eleven days to a U.S. government default and White House Press Secretary Jay Carney, House Speaker John Boehner and House Majority Leader Eric Cantor all went to great lengths to shoot down reports this afternoon that negotiators were close to a sweeping deal to extend the debt ceiling. Hit the jump to read the rest of the story.
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Democrats on Capitol Hill were increasingly nervous that the president and House Speaker would push a proposal that included deep spending cuts, but without any increased taxes to offset the effects those cuts would have on government programs.

“There is no deal. No deal publicly, no deal privately. There is absolutely no deal,” Boehner told Rush Limbaugh.

“There is no deal. We are not close to a deal,” Carney definitively told reporters in Thursday’s daily press briefing.

But there is increasing resolve that something must be done before the August 2nd deadline, when the U.S. government, which runs a $4 billion daily deficit, will no longer be able to pay all of its bills.

“We’re not going to default, Jake,” Carney told ABC’s Jake Tapper Thursday. “Congress will act and has said that it will act, and we remain confident that it will.”

And Boehner told Limbaugh that he is actively pursuing “fallback plans.”

“We’ve talked about fallback options if, in fact, Cut Cap and Balance does go down. And I do think that it’s our obligation to have a fallback plan if it doesn’t work,” Boehner said.

Work on those fallback plans does continue behind closed doors. Democratic leaders from Capitol Hill were summoned back to the White House for a 5:30pm meeting. The President has been meeting separately with Republicans and Democrats off and on for the past week. The last time he met with both leaders from both parties at the same time was July 14th.

President Obama has been working with congressional leaders on several options to avoid risk of defaulting on US debts, including a bill that would raise the debt ceiling and reduce the deficit through the much-discussed “Grand Bargain” of roughly $4 trillion in spending cuts, entitlement reforms and cuts, and tax reform that would generate new revenue. It is the nature of that tax reform and the size of the revenue that seem to be major sticking points.

Senate Majority Leader Reid spoke to reporters after a contentious closed-door meeting between senate Democrats and President Obama’s budget director, Jack Lew.

Two democratic sources said Lew he faced “some very angry Democrats” as reports of a potential deal between Obama and Boehner that would rely on spending cuts but not include any revenues to offset cuts to programs leaked throughout the Hill.

There was also emphasis on the deal that had been constructed by Leaders McConnell and Reid – the least expansive but simplest option, which would achieve $2 trillion in deficit reduction and give President Obama authority to raise the debt ceiling and remove Congressional roadblocks, but also give Republicans ample opportunity to note their opposition when he did.

Democrats are adamant that a debt deal must offset spending cuts with tax measures.

“What I have to say is this, the President always talked about balance,” said Senate Majority Leader Harry Reid. “That there had to be some fairness in this. That this can’t be all cuts. There has to be a balance. There has to be some revenue in the cuts, my caucus agrees with that. I hope the President sticks with that. I’m confident he will.”

Most Republicans are just as clearly still united against any sort of tax hike.

“The reason we’ve got a debt crisis is that government spends every cent it gets — and then some,” said Senate Minority Leader Mitch McConnell on the senate floor Thursday morning. “

“Sending Washington more money will not solve that problem, it will enable it.

In public, Republicans continue to focus their attention on the Cut, Cap and Balance Act, which would mandate steep spending cut in the short term and cap spending to 18 percent of the GDP going into the future. That star-crossed legislative proposal passed the House this week and is set for a vote Friday in the Senate, where Democrats, convinced it would gut entitlement programs like Medicare and Social Security, are sure to defeat it.

What is becoming clear is that any big solution to deal with the debt will likely not be completed and signed into law by August 2nd. And so President Obama relented Wednesday on his pledge not to sign any short-term legislation, but only to bridge the gap between arriving at a deal and getting it turned into legislation and passed through Congress.

Further on the margins of the debate appeared to be the Gang of Six, a bipartisan and unlikely group of Senators that used the President’s deficit commission as a model to envision sweeping tax and entitlement reform. That group, despite its bipartisan nature, drew skepticism from Senate leaders because their proposal included revenue measures which would have a hard time passing the House.

ABC