Efforts to find a bipartisan agreement blending huge budget cuts with a must-pass measure to increase how much the government can borrow have entered a new phase after Republican negotiators pulled out of talks led by US Vice President Joe Biden.
The exit of Eric Cantor, Republican majority leader in the US House of Representatives, from the talks on Thursday means the most difficult decisions have been moved upstairs to Republican House Speaker John Boehner and US President Barack Obama. The Biden-led group had made solid progress in weeks of negotiations, but was at an impasse over taxes.
Passage of the legislation this summer is necessary to meet the government’s obligations to holders of US Treasurys. The alternative is a market-shaking, first-ever default on US obligations.
Cantor said that the Republican-dominated House simply will not support tax increases and that it is time for Obama to weigh in directly. Democrats said it’s only fair to blend in additional revenues from closing tax breaks to balance trillions of dollars in spending cuts.
It had long been assumed that the Biden group would set the stage for more decisive talks involving Obama and Boehner. As a result, Cantor’s move was interpreted as trying to jump-start the talks rather than blow them up — a view shared by Cantor himself.
The White House sought to put a positive spin on developments.
“As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders,” Biden said in a statement. “The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. For now the talks are in abeyance as we await that guidance.”
For his part, Cantor said the -secretive Biden-led talks had “established a blueprint” for agreement on significant cuts in spending.
Democrats insist that at least some new revenues are needed — both to soften spending cuts and to line up the Democratic votes needed to pass the measure.
Cantor said that plenty of progress has been made in identifying trillions of dollars in potential spending cuts to accompany legislation to raise the US$14.3 trillion cap on the government’s ability to borrow money. The US Senate’s Republican -negotiator, Jon Kyl, also exited the talks.
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