POLITICS

Debt ceiling talks go into weekend

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White House and congressional negotiators and their aides continued to work on deficit-cutting ideas to add to a set of proposals tentatively agreed to in talks led by Vice President Joe Biden in May and June. The earlier proposals would shave $2 trillion or so off the deficit. Obama has asked the top eight leaders of Congress to come to the White House on Sunday to assess progress in the talks.

(Photo: Associated Press)

A budget agreement is central to increasing the nation's borrowing limit, currently capped at $14.3 trillion, by Aug. 2.

If that deadline isn't met, there could be a potentially catastrophic government default on obligations to bondholders, government contractors and people relying on Social Security and other government programs. That deadline and a new unemployment rate of 9.2 percent heightened the pressure for a deal, uniting the two most high-profile challenges facing Obama's presidency.

Obama urged Congress to move quickly to raise the debt ceiling, saying the uncertainty over a potential default has hindered hiring in the private sector.

He later made his case privately to House Democratic leader Nancy Pelosi of California during a half-hour meeting at the White House.

Both parties and private economists agree that if Washington does not raise the debt ceiling by early August, the economy could slip back into recession.

The White House and Congress are seeking common ground on a budget deal that would trim 10-year deficits by as much as $4 trillion. Obama has urged lawmakers to strive for that number, but some officials on Friday said they believed that a smaller, $2 trillion deal appeared more realistic.

The larger package would require new tax revenues and significant spending reductions in large government benefit programs such as Medicare, Medicaid and Social Security.

But liberal Democrats whose votes will be needed to balance GOP defections and get a deal passed recoiled over the possibility that Obama would endorse cuts to Medicare or Social Security. For example, the administration and lawmakers are looking at less generous adjustments for inflation, which would reduce future Social Security payments.

"I'm a Democrat. I got elected to Congress to protect Social Security and Medicare, not dismantle them," said Rep. Jim McGovern, D-Mass. "Yes, we do need entitlement reform, but we need to do this thoughtfully, not come to a deal in a weekend."

Republicans played down media reports suggesting that Boehner was willing to entertain the possibility of higher tax revenues as part of a "grand bargain" that included cuts to benefit programs like Social Security and Medicare.

"Conservatives are just not going to vote for a tax increase on this economy," Rep. Trent Franks, R-Ariz., said, reflecting a common view among his GOP colleagues. "It's just not going to happen."

On health care, negotiators have been closing in on cuts of about $200 billion over 10 years, about equally divided between Medicare and Medicaid, with most of the burden falling on individual industries such as hospitals, drug manufacturers and nursing homes.

One Social Security proposal on the negotiating table would lower annual cost-of-living increases, reducing the retirement benefits for older Americans over the long term.

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