Deadlocked debt talks may move past ‘grand bargains’
UPDATED INTERVIEW
STEVE CHIOTAKIS: President Obama and Republican leaders are still at it — trying to hammer out a deal that’ll raise the nation’s debt limit. And do it by August 2, or the country could default on that debt. The president is speaking to reporters right now. Proposals include cuts to entitlements, getting rid of tax loopholes even tax increases perhaps down the road. One thing the president this morning said he would not do, and that is agree to a temporary deal, one that’s 60 or 90 days.
BARACK OBAMA: This is the United States of America. And we don’t manage our affairs in three-month increments. We don’t risk U.S. default on our obligations because we can’t put politics aside.
The president at the White House about 20 minutes ago.
Marketplace’s David Gura is live with us from Washington with more on the story. Good morning David.
DAVID GURA: Good morning Steve.
CHIOTAKIS: All right so we heard the president just say that he’s not looking for a stopgap measure. But we’re getting close to a deadline. What’s going on?
GURA: Well actually, yesterday, the Senate Minority Leader, Mitch McConnell was on FOX News. And he was asked if there is a contingency plan. And McConnell said yes, there’s always a contingency plan, but he was kind of coy. He wouldn’t share any specifics. Look, if there’s no deal by August 2, we could see short-term measures to allow negotiations to go on for a little while longer. And Steve this deadline has been moved back a few times before.
CHIOTAKIS: Yeah. Well on Friday, there was optimism David, as you know — a big bipartisan deal perhaps. But the way the president is talking right now and he’s still speaking, a deal seems less likely. He’s more combative it seems like. How did that turnabout happen?
GURA: You’re right. I mean headed into the weekend, President Obama was pretty optimistic. He went to Camp David, amid rumors of a “grand bargain.” But then, on Saturday, he got a call. It was House Speaker John Boehner, with some bad news. Boehner said Republicans weren’t interested in the kind of deal the president wants — one that would save as much as $4 trillion over the next decade, from cuts to Medicare and new tax revenue which is Washington-speak for “raising taxes.” Instead, the GOP seems more interested in a less-ambitious deal — one that would center on spending cuts.
CHIOTAKIS: But so far, the markets have been performing pretty well, despite all the talk of default, right?
GURA: That’s true. But many of the analysts I spoke to said that’s because investors can’t fathom — they can’t imagine — Congress will not raise the debt limit. And indeed the President just said at his news conference that the politicians he’s talking to — the Congressional leadership — won’t let that happen.
I talked to Scott Brown. He’s chief economist of Raymond James. And he said the White House and Congress, they’ve put themselves in a really tough position here — trying to raise the debt limit and reduce the deficit.
SCOTT BROWN: You can’t expect to solve long-term problems under this short-term pressure like this. It just doesn’t make any sense.
Brown said the debt limit, which is an economic issue, a fiscal issue has become a political issue. And right now, the president is trying to assure Americans and investors that, despite all the politics, he’s taking this seriously, Congress is taking this seriously, and eventually, there’s going to be a deal.
CHIOTAKIS: There’s going to be a deal. Well, we’ll see. Marketplace’s David Gura in Washington. David thanks.
GURA: Thanks Steve.
ORIGINAL INTERVIEW
JEREMY HOBSON: President Obama will meet again today with lawmakers from both parties in search of a deal to raise the nation’s debt limit — in exchange for massive deficit cuts. We are just three weeks away from August 2, which the Treasury Department says is the deadline to avoid a national default. So, where do things stand now?
Marketplace’s David Gura joins us live, from Washington. Good morning.
DAVID GURA: Good morning Jeremy.
HOBSON: Well, any momentum going into today’s meeting?
GURA: Well, heading into the weekend President Obama was pretty optimistic. He went to Camp David, amid rumors of “a grand bargain.” But then on Saturday, he got a phone call — the kind of phone call a president doesn’t want to get at Camp David. It was Speaker of the House John Boehner with some bad news. He said Republicans weren’t interested in the kind of deal the president wants — one that would save as much as $4 trillion over the next decade from cuts to Medicare and new tax revenue, which, of course, is code for raising taxes. Instead the GOP seems more interested in a less-ambitious deal. One that would center on cuts. Last night, there was a meeting at the White House Jeremy, but after that wrapped up, there was still no agreement.
HOBSON: Still no agreement, and so far it seems like markets have been okay with no agreement because the think there will eventually be one. But we are getting close to that August 2 deadline now, David.
GURA: That’s true. And over the weekend, Treasury Secretary Tim Geithner said that if Congress doesn’t raise the debt limit, the markets could react negatively.
I asked Gregory Miller about that. He’s chief economist with Sun Trust, a bank based in Atlanta.
GREGORY MILLER: The worst thing that can happen to an investor is to confront uncertainty and figure out how to price it into trading decisions, quite frankly.
And Miller told me that’s what investors have been, and are being, forced to do. And yet, yesterday, Senate Minority Leader Mitch McConnell said that “nobody is talking about not raising the debt ceiling.” He says there are contingency plans in place, Jeremy, but he’s not saying what they are.
HOBSON: Marketplace’s David Gura in Washington, thanks David.
GURA: Thank you.
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