Speaker walks out of Obama talks

Efforts to avert a threatened US government default were thrown into renewed crisis today after House of Representatives speaker John Boehner abruptly broke off talks with President Barack Obama on a deal to make major spending cuts.

Efforts to avert a threatened US government default were thrown into renewed crisis today after House of Representatives speaker John Boehner abruptly broke off talks with President Barack Obama on a deal to make major spending cuts.

Within minutes of Mr Boehner’s announcement, an obviously peeved Mr Obama virtually ordered congressional leaders to the White House for fresh negotiations today on raising the US debt limit.

“We’ve got to get it done. It is not an option not to do it,” Mr Obama declared.

If Congress does not raise the nation’s 14.3 trillion-dollar debt limit before the August 2 deadline, the US Treasury will be unable to pay all its bills. Officials say a default could destabilise the already weakened US economy and send major ripple effects across the globe.

Even by the recent standards of divided government, Mr Boehner’s decision triggered an extraordinary evening as first the Democratic president and then the Republican speaker manoeuvred for political position on an issue of enormous national import.

For the first time since talks began, Mr Obama declined to offer assurances, when asked, that default would be avoided. Moments later, however, he said he was confident of that outcome.

Mr Boehner, at a rebuttal news conference of his own a short while later, said: “I want to be entirely clear, no-one wants default on the full faith and credit of the United States government, and I’m convinced that we will not.”

Unspoken, yet unmistakable in all the brinkmanship was the 2012 election campaign, still 18 months away, with the White House and both houses of Congress at stake.

In a letter circulated earlier to the House Republican rank and file, Mr Boehner said he had withdrawn from the talks because the president wanted to raise taxes and was reluctant to agree to cuts in benefit programmes.

The disconnect was “not because of different personalities but because of different visions for our country”, he said, and he announced he would now seek agreement with the Democratic-controlled Senate.

But Mr Obama was having none of that, announcing instead a morning White House meeting where he said he expected to hear proposed solutions from the leaders of both parties in both houses.

“One of the questions the Republican Party is going to have to ask itself is, ’Can they say yes to anything?’,” Mr Obama said.

The president avoided direct criticism of Mr Boehner, although he did mention that his phone calls to the speaker had gone unreturned during the day.

One administration official said the president had tried to reach Mr Boehner four times. Asked about the spurned calls, Mr Boehner said he did not think his relationship with Mr Obama had been “irreparably damaged”.

Boehner said he would attend today’s meeting at the White House. Others expected to attend are the House Democratic leader Nancy Pelosi; Senate majority leader Harry Reid, a Democrat, and Senate Republican leader Mitch McConnell.

Private, sometimes-secret negotiations had veered uncertainly for weeks, generating reports as late as Thursday that the two sides were possibly closing in on an agreement to cut three trillion dollars in spending and add as much as one trillion in possible revenue while increasing the government’s borrowing authority of 2.4 trillion.

That triggered a revolt among Democrats who expressed fears the president was giving away too much in terms of cuts to benefit programmes for the elderly and poor while getting too little by way of additional revenues.

“Failing to raise the debt ceiling would do irreparable harm to our credit standing, would undermine our ability to lead on global economic issues and would damage our economy,” former treasury secretary Henry Paulson, a Republican, told reporters during the day.

Current administration officials and Federal Reserve chairman Ben Bernanke have said much the same thing for weeks – while gridlock persisted in Congress.

Mr Obama said his only requirement for an agreement was legislation that provides the treasury enough borrowing authority to tide the government over through the 2012 election.

At the same time Mr Obama and Mr Boehner sought to define the clash to their political advantage, their aides provided details of the talks that had ended without an agreement.

Republican aides said the White House had demanded additional tax increases during the week, in the wake of a proposal by the bi-partisan “Gang of Six” in the Senate, who called for an overhaul of the tax code that would increase revenue by one trillion dollars over a decade.

Additionally, the aides said the two sides were not able to bridge their differences over the triggers designed to force Congress to enact both tax reform and cuts to some benefit programmes by early next year.

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