President Barack Obama met Monday with Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., to look for an agreement on raising the debt ceiling before the current limit expires Aug. 2.
Obama and Reid said there's hope for an agreement, the White House said. McConnell's office did not issue a statement following his meeting with the Democratic president.
Before the meeting with McConnell, White House officials said Obama planned to push for ending tax breaks for major oil and gas companies and tax loopholes for corporate jets, and to levy standard income tax rates on some forms of interest earned by investment fund managers -- but would not argue for elimination of across-the-board tax rates enacted in 2001 under Bush, The Hill reported.
Speaking on the Senate floor Monday, McConnell said any plan to increase tax revenues -- including ending special tax breaks -- was unacceptable to Republicans.
"At some point, the president needs to realize that the reason our debt has skyrocketed 35 percent over the past two years and that our annual deficit is now three times greater than the highest deficit the previous administration ever ran is that spending has spiraled completely out of control," McConnell said.
White House spokesman Jay Carney said, however, a balanced approach to deficit reduction must include raising revenues.
"Everybody agrees that a big -- a significant deficit reduction deal is possible, and for that to happen we have to have a balanced approach -- and that includes making sure that we achieve significant deficit reduction in a balanced way, through cuts in non-defense discretionary spending, through cuts in defense spending, through savings out of the tax code and through obviously savings through entitlements and interest on the debt," Carney said. "That's the way you get to significant deficit reduction. That's the way everyone who's taken on this problem -- save one group -- everyone who's taken on this problem in the last six, eight, 10 months, that's the approach they've taken. So we believe it's possible, and we believe that we can do it."
Talks headed by Vice President Joe Biden broke down last week when House Majority Leader Eric Cantor, R-Va., pulled out, saying negotiators had reached an impasse.
Carney said the administration still supports elimination of the Bush administration tax cuts for upper-income Americans as well as elimination of tax loop loopholes and subsidies to the oil and gas industries.
"It's the only way to get it done if you want to do it right and you want to do it in a way that is fair and balanced and ensures that the economy continues to grow and continues to create jobs," Carney said.
House Minority Leader Nancy Pelosi said Sunday the Republican stance that tax cuts create jobs is false.
"All this talk about tax cuts in the Bush years -- the Republicans said tax cuts will produce jobs. They didn't. They produced a deficit," Pelosi, D-Calif., said on CNN's "State of the Union."
Republicans, also speaking on Sunday TV talk shows, said any tax increase would further slow economic recovery.
"If you want to kill the economy, raise taxes," Senate Minority Whip Jon Kyl, R-Ariz., said on "Fox News Sunday."
Republicans have said slashing more than $2 trillion from the federal deficit is required for a separate agreement for Congress to raise the federal debt ceiling by Aug. 2, or face a possible default on some financial obligations.
"It isn't true that the government would default on its debt [Aug. 2] because, very simply, the treasury secretary can pay the interest on the debt first and then, from there, we have to just prioritize our spending," Rep. Michele Bachmann, R-Minn., told CBS' "Face the Nation," one day before announcing she would seek the Republican presidential nomination.
"I have no intention of voting to raise the debt ceiling because right now the federal government continues to spend more money than what it takes in. The American people want us to get our house in order," Bachmann said.
Some Republicans said it would be easier to support a debt-reduction package that makes significant cuts in military spending -- a key Democratic demand -- than one that raises revenue by tinkering with the tax code.
"Look, I know there are sacred cows," freshman Rep. Adam Kinzinger, R-Ill., told The Washington Post. "But we cannot afford them anymore."
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