McConnell Offers Debt Ceiling Out, But Obama Keeps Focus On Deficit

[Derechos]

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For all its talk of the importance of averting a debt default, the White House is signaling that major deficit reduction has become more than just a bargaining chip to bring Republicans aboard a debt deal.

Treasury Secretary Timothy Geithner opened Tuesday's meeting not by focusing on the perils of debt default, but instead with a "vivid" presentation on "what happens if you don't cut the deficit," according to a Democratic source familiar with the talks.

Geithner warned the group that ratings agencies are actively watching both the debt ceiling debate and the ability of Congress to turn around the nation's growing deficit and debt. He pointed to the economic unrest in Europe as evidence of what could happen in the United States if the White House and Congress don't tackle the deficit in a serious way.

Lawmakers obviously discussed the pressing consequences of debt default, said the Democratic official. And on that front there still "continues to be a big difference on revenue."

But as negotiations on a debt package resumed, Obama made it clear that he isn't playing small ball. He warned Republicans that the major concessions he has offered on entitlement reforms are off the table if they don't agree to a sizable debt deal. There could still be some tinkering with Medicare and Medicaid, he told the group, but it would come from the supplier side, not the benefit side.

http://www.huffingtonpost.com/2011/07/12/mcconnell-debt-ceiling-obama-deficit_n_896649.html