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With Obama-Boehner talks off, Reid will now negotiate with Republicans

Updated Friday, July 22, 2011 | 5:18 p.m.

John Boehner

John Boehner

House Speaker John Boehner’s change of heart means a new negotiation team is going to have to strike a deal to raise the debt limit: President Barack Obama’s been benched, and Senate Majority Leader Harry Reid’s back in.

Boehner pulled out of debt limit negotiations with President Obama Friday evening, kicking the process back to Congress, and setting up final showdown between Boehner and his old backroom partner and rival, Reid.

Boehner announced he planned to ditch the talks through a letter sent to House Republicans shortly before 6 p.m. (EST) Friday, in which he complained that he and the president “couldn’t connect...because of different visions for our country” but expressed the opinion that “there is a shared commitment” between House and Senate leaders “to producing legislation that will serve the best interests of our country.”

But Reid certainly didn’t sound like he was of one mind with Boehner.

“Republicans have once again proven unable to overcome their ideological opposition to ending taxpayer-funded giveaways for millionaires, corporate jet owners, and oil companies,” Reid said in a statement. “I applaud President Obama for insisting that any deal to reduce our deficit be balanced between cuts and revenues. We must avert a default at all costs, so it is time to reengage in bipartisan talks on an agreement that at least accomplishes that goal.”

Reid, it so happens, is sitting on such a back-up plan, one that he preferred to the elusive Obama-Boehner bargain.

In fact, most Democrats -- who were only informed of the Obama-Boehner negotiations Thursday -- hated the deal the two were working on.

“We have put forward a plan that is more generous to Republican concerns than a bipartisan plan that was supported by a number of Republican senators, including at least one in leadership,” Obama said, referring to the Gang of Six and Sen. Lamar Alexander -- who met with Reid and Senate Republican Leader McConnell about ways to blend their plan and Reid and McConnell’s “backup” measure.

The Gang of Six proposal was a $4 trillion package of cuts and tax revenue generators, while the Reid-McConnell plan sets up a mechanism under which the president raises the debt ceiling in stages, in exchange for a medium-sized package of cuts and an arcane vote structure that guarantees Republicans won’t have to directly authorize the president to raise the country’s borrowing authority.

It contains no tax increases. The president also said Friday night that he was "willing to take the responsibility" to raise the debt ceiling alone, because "that’s my job."

The plan the president and Boehner were hammering out, however, swung heavily in the direction of cuts over revenues, and made changes to the entitlement programs that Democrats have been trying to keep intact.

“Nancy Pelosi, and Harry Reid, and the Democratic leadership -- they sure did not like the plan that we were proposing to Boehner, but they were at least willing to engage in a conversation,” Obama said. “Even if I didn’t think the deal was perfect, at least it would show that this place is serious, that we’re willing to take on our responsibilities even when it’s tough.”

“I think the Republican Party has to ask themselves...what can you say yes to?” Obama continued. “If their only answer is what they’ve presented...then it’s going to be pretty difficult to figure out where to go.”

Republicans have coalesced around a plan they call “Cut, Cap, and Balance”, which would direct Congress to pass a balanced-budget amendment in order to raise the debt limit by $2.4 trillion. But that balanced budget amendment -- a constitutional amendment that would have to be ratified by at least 38 states -- would cap spending at 18 percent of GDP.

That’s a level below spending levels Republicans endorsed in their preferred 2012 budget proposal that’s come to be known by the name of its author, Rep. Paul Ryan; the progressive research group the Center on Budget and Policy Priorities has also charged that the program, if adopted, would cause the economy to purge 700,000 jobs.

Reid put a motion to table the Cap, Cut, and Balance plan to a vote Friday morning that failed, effectively ending the life of that legislation. But Republicans certainly aren’t convinced of that.

Boehner said specifically that he believed he could strike a deal with Reid and McConnell “consistent with the principles of the Cut, Cap, & Balance Act that passed the House with bipartisan support this week” in his letter to his conference.

And earlier Friday, House Majority Leader Eric Cantor announced that the House would be having a vote on a balanced budget amendment next week -- the next step in the Cut, Cap, and Balance process -- and according to Republican sources, that’s the only topic of conversation he raised with House Republicans in a conference-wide meeting Friday morning.

But while everyone -- Boehner, Reid, and Obama, who is summoning those two along with McConnell and Pelosi to the White House tomorrow morning -- has said a short-term deal is not an option, there’s a practical problem: they only have 10 days before Aug. 2, the default date.

“We have run out of time,” Obama said. “If we can’t come up with a serious plan...then the probabilities of downgrading U.S. credit are increased, and that will be an additional cloud over the economy.”

But urgency yielded to the blame game.

“It’s the president who walked away from his agreement,” Boehner said Friday night, complaining that Obama had “moved the goalpost” in the last 24 hours, demanding a $400 billion increase in taxes over what they’d agreed to. "They refused to get serious about cutting spending."

The president seemed to anticipate that complaint, and quash it in his press conference, which took place a little over an hour before Boehner’s.

“There’s no change of the goalposts here...we have operated above board consistently, there haven’t been any surprises,” Obama said, lamenting that he and Boehner were within $10 billion or $20 billion of sealing an agreement, and pointing out that he'd been attempting to reach Boehner by phone all day.

“I think the challenge really has to do with the seeming inability, particularly in the House of Representatives, to arrive at any position that compromises any of their ideological preferences," Obama continued. "None. And you’ve heard it -- I’m not making this up.”

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