CONFRONTATIONS BETWEEN the White House and the Republican-controlled House of Representatives over the debt ceiling and the war in Libya continued yesterday, following the breakdown of talks on the debt on Thursday.
By walking out of talks aimed at reaching an agreement to raise the $14.3 trillion (€10.1 trillion) debt ceiling before an August 2th deadline, the House majority leader, Eric Cantor, forced President Barack Obama to enter the fray.
The bipartisan talks, under vice-president Joe Biden, started on May 5th, and were supposed to have reached agreement this week.
After Mr Cantor’s walkout, Mr Biden pronounced the debt talks “in abeyance”. The White House announced yesterday afternoon that the president and vice-president would meet Senate Republican and Democratic leaders separately on Monday in an attempt to move forward on resolving the debt crisis.
If they fail, the US could default on its debts and the dollar could plummet on foreign exchange markets. Credit rating agencies have warned that they may downgrade the US credit rating.
The Congressional Budget Office predicts that the US debt could exceed the size of the entire economy by 2021.
Republicans have long accused Mr Obama of failing to lead on the debt issue.
The talks disintegrated in acrimonious exchanges about taxation. The president “needs to decide between his goal of massive tax hikes and a bipartisan plan to address our deficit. But he can’t have both,” the Senate minority leader, Mitch McConnell, said in a statement yesterday.
Mr McConnell and Mr Obama hammered out an agreement to continue Bush-era tax cuts for the rich for another year, last December. But the president said he was still determined to end the tax cuts.
Mr Cantor refused to negotiate further if the possibility of raising tax cuts was not removed from the table. “The Democrats continue to insist that any deal must include tax increases,” he said in a statement.
“There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation . . . The tax issue must be resolved before discussions can continue.”
Republicans have insisted that trillions of dollars in deficit reduction come solely from cutting government spending, including such programmes as Medicare and Medicaid.
Democrats say that spending cuts must be offset by increased revenue, for example by eliminating tax breaks for petroleum and gas companies.
White House press secretary Jay Carney said Mr Obama “supports a balanced approach”, not one that provides “a tax cut for millionaires and billionaires paid for by a $6,000-a-year hike in expenses and costs for seniors.”
This is at least the third time in a year that bipartisan negotiations to tackle the debt issue have failed.
The plan proposed by a presidential debt commission last December could not obtain enough support in Congress for a vote. In May, negotiations by the “gang of six” senators collapsed when a Republican senator withdrew.
“We’re beyond gangs of five and gangs of sixes,” said Senate majority leader Harry Reid. “It’s in the hands of the speaker and the president and sadly, probably me.”
On the Libyan war, too, there is stalemate, despite two much-anticipated votes in the House of Representatives yesterday.
Congressmen from both parties have accused Mr Obama of violating the War Powers Act by engaging US forces in Libya without legislative authorisation.
A resolution to fund US operations in Libya for another year was rejected in the morning by a vote of 295 to 123. A second Bill, which would have cut support for the Nato mission, was also rejected, by 238 to 180 votes.
The second vote was motivated by representatives’ reluctance to damage relations with US allies, and was considered a surprise victory for the White House.