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Updated: 10:22 p.m.
Speaker John Boehner (R-Ohio) abandoned efforts to craft a far-reaching $4 trillion debt deal Saturday night because of insistence from the White House that such a package include tax increases.
Instead, Boehner is insisting on a smaller deal that would raise the debt ceiling but include a more modest level of cuts to spending, and possibly entitlements.
The announcement set off a flurry of pronouncements from both parties on what they would and wouldn't accept as part of a deal to raise the debt ceiling. Treasury Secretary Timothy Geithner has warned that the U.S. faces a potentially catastrophic default on Aug. 2 — the date Treasury has said the U.S. will no longer be able to service its debts without an increase to the limit.
Boehner spoke with President Barack Obama Saturday evening to give the president and Congressional leaders time to plan ahead for the Sunday meeting at the White House, which is still expected to go forward as planned.
"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," Boehner said in a statement. "I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase." Boehner was referencing talks led by Vice President Joseph Biden.
The White House quickly issued a statement making it clear that Obama had no intention of letting up on his drive for a comprehensive package — or for some tax code sacrifices from the wealthy and businesses that receive tax subsidies, even if the price of the deal goes down.
"We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree," said Dan Pfeiffer, a White House spokesman.
"Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington. The President believes that now is the moment to rise above that cynicism and show the American people that we can still do big things. And so tomorrow, he will make the case to congressional leaders that we must reject the politics of least resistance and take on this critical challenge."
Republicans said Boehner's decision could mean a formal resumption of talks between Biden and House Majority Leader Eric Cantor (Va.). Those talks had identified more than $2 trillion in cuts and were the foundation of the talks between Boehner and Obama.
Though Cantor notably walked out of those talks late last month — also over Democratic demands for higher revenues — both Biden and Cantor have stayed in contact and their staffs have had debt and deficit discussions in the interim period, Republicans said.