Debt celing talks. Some interesting stuff today in Bloomberg, TPM, The Hill

[chill_wind]

TPM:

Most of the real differences remained, as they have throughout the negotiations, focused on net tax increases


As of Thursday morning, the two sides were still $400 billion apart. Boehner had agreed to raise $800 billion in revenue over ten years from allowing the Bush tax cuts to expire at the end of next year on the wealthy -- those making $250,000 and above -- but the President wanted an additional $400 billion more to provide more balance to offset cuts to entitlements such as Medicare and Medicaid.

White House officials said they continuously stressed their willingness to dial parts of the deal up or down, but in the end it had to be balanced.

Boehner, however, said the $400 billion demand on taxes came suddenly when the Senate's Gang of Six announced their deal, which included roughly about $1.2 trillion in revenue raisers. Just the day before, the White House countered, Boehner had asked that any deal include a repeal of the individual mandate in the healthcare reform law, including the Independent Payment Advisory Board , which were non-starters for the administration.

The two sides were incredibly close when it came to costs savings for Medicare and Medicaid, with the President agreeing to $425 billion in savings over 10 years. Republicans wanted roughly $40 billion more than Democrats would agree to as of Thursday. Some of the savings would be achieved by gradually increasing the eligibility beneficiary bracket from 65 to 67 over a period of many years.

"In a multi-trillion package that gap there was in the tens of of dollars," a White House official remarked.

The would-be deal also included a loose agreement to prevent the future shortfall in Social Security, but the two sides differed in the approaches they wanted.

Boehner would have let the Bushtax cuts expire on the top incomers- in exchange for repealing the individual health care mandate.



White House: We Thought We Were Down To The Details
Susan Crabtree | July 22, 2011

http://tpmdc.talkingpointsmemo.com/2011/07/white-house-we-thought-we-were-down-to-the-details.php?ref=fpblg



The Hill has more on this. re: the Bush tax cuts and the individual mandate

At that meeting, the House GOP leaders presented a framework for a grand bargain that would initiate a two-step process. Under their proposal, Congress would pass an increase in the debt limit before Aug. 2 along with a cap on discretionary spending. That legislation would also have set up a process for congressional action over the next several months on entitlement and tax reforms and would have authorized an increase in the debt limit roughly through February.

The White House balked at the short-term nature of the debt limit increase, insisting on Obama’s demand that Congress allow the Treasury to borrow funds through the 2012 elections.

Instead, the administration proposed a long-term increase in the debt ceiling along with a failsafe to ensure Congress acted on entitlements and taxes despite the pressures of an election year. The administration proposal called for decoupling the George W. Bush-era tax rates, thereby allowing the high-income rates to expire, which Republicans have long opposed, while allowing lower-income rates to remain. On the Democratic side, the failsafe would have initiated automatic cuts in Medicare and Medicaid if Congress did not act.

Boehner and Cantor opposed the Democratic trigger mechanism and proposed that if Congress failed to act, the individual mandate in Obama’s signature healthcare law would be repealed.

“We were insisting that there had to something in there from the Affordable Care Act. We specifically requested that they repeal the individual mandate,” a House GOP aide said. That would “make the politics of it even. The politics would be bad for both sides. That was the concept we were striving for.”

Obama “had not conceded on that,” the aide said. In a separate briefing, White House officials confirmed that they balked at the possibility of scrapping the requirement that all Americans buy health insurance.

Leaders returning to White House after Boehner cuts off debt talks
By Russell Berman - 07/22/11 09:20 PM ET
http://thehill.com/homenews/house/173091-boehner-cuts-off-debt-talks-with-obama


Bloomberg:


Tax Dispute Gang of 6's baseline v Congressional leaders'.

House Republican leadership aides said the key stumbling block to a deficit-reduction agreement was the dispute over taxes, with the president pressing for more revenue to be raised through a tax code rewrite than Republicans were willing to accept.

The aides said a breaking point in the talks came after a bipartisan group of senators known as the Gang of Six unveiled its plan on July 19 to slash $3.7 trillion from the debt through spending cuts and a tax overhaul that would produce $1 trillion more in tax revenue. The bipartisan group used a different baseline to compare revenue than congressional leaders used in the White House negotiations.

The Republican aides said the revenue increase in the bipartisan plan was larger than one Boehner and Obama had tentatively agreed to. An administration official said the plan changed the political dynamics in the push for a deal.


Rather than offering any counterproposals, Boehner’s team broke off communication, the official said.

The Bloomberg article stipulates that Obama would have included SS Cola cuts in the bargain. It wasn't $650 billion cuts in post-it notes and paper clips.


And if you haven't had enough, the grudge match could conceivably get dragged out another extra week.

Greater-than-expected tax receipts might give the U.S. Treasury an extra week -- until Aug. 10 -- before exhausting its borrowing authority, analysts with New York-based Barclays Capital said yesterday. The government has collected about $14 billion more in tax revenue since July 14 “than we were expecting,” the analysts wrote.

more: Obama Summons Lawmakers to White House to Revive Debt Talks

Mike Dorning and Kate Andersen Brower - Jul 23, 2011 6:00 AM ET

http://www.bloomberg.com/news/2011-07-22/obama-says-republicans-walking-away-from-fair-deal-in-debt-ceiling-talks.html


Where do things go now?

Boehner-Obama Talks Collapse, On To Plan B — The Question Is Which One?(TPM, Brian Beutler)

There are a few ways it can go. The one most recently floated comes from Pelosi. It would cut well over $2 trillion from current discretionary spending -- factoring in the expected wind-down of the wars in Iraq and Afghanistan -- interest payments on the national debt, and certain mandatory programs. No entitlements. In exchange, Congress would raise the debt limit, and expedite a legislative debate on entitlement and tax reform.

Option two -- the Reid/McConnell plan, is sitting on a shelf in the Senate. It will include about $1.5 trillion in cuts, and create a 12-member ad hoc congressional committee to address entitlements and tax reforms. This plan would transfer the authority to raise the debt limit to President Obama, and give members of Congress the chance to take a symbolic protest vote against that action.

An earlier version of that plan, proffered by McConnell, included no cuts to spending, no committee, but would have required Obama and Democrats in Congress to go through myriad political machinations, before the debt limit can be raised.

http://tpmdc.talkingpointsmemo.com/2011/07/boehner-obama-talks-collapse-on-to-plan-b----the-question-is-which-one.php


If you missed it yesterday, see what Pelosi and other Dem leadership was working on if the Obama-Boehner negotiations blew up:

Pelosi Outlines Revenue-Free Path Forward On Debt Limit Fight

Brian Beutler | July 22, 2011, 2:28PM

http://tpmdc.talkingpointsmemo.com/2011/07/pelosi-outlines-revenue-free-path-forward-on-debt-limit-fight.php