Obama wants bigger debt deal - up to $4 trillion

Obama presses Congress to cut budget deal
AP Photo/Charles Dharapak

Two Democratic officials familiar with the negotiations over a deal to raise the debt limit said Wednesday that President Obama wants the final deal to be bigger than the $2 trillion deal that has been the focus of negotiations so far.

In fact, they said, Mr. Obama wants the deal to save the government as close to $4 trillion as possible.

Mr. Obama said Tuesday that lawmakers have "a unique opportunity to do something big," and a deal to save the federal government $4 trillion would certainly qualify. The officials said the president believes "these moments come around at most once a decade" and that "you can't run away from an opportunity like this."

According to the officials, Mr. Obama believes that a larger deal would actually be easier to get through Congress. His thinking, they indicated, is this: Any major deal, whether it's for $2 trillion in cuts or $4 trillion in cuts, will cause significant pain for both parties. But a larger deal allows backers to argue that despite their misgivings, they've taken a major step toward dealing with the deficit and debt problem.

Mr. Obama made the case for doing something "significant," - that is, the larger deal - in conversations on Tuesday with the four top leaders in Congress: House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

The president called for a $4 trillion deficit cut over 12 years in a speech in April, achieved in part by raising taxes on the highest-earning Americans. 

While Democrats initially called for a "clean" vote to raise the debt ceiling, they eventually began negotiating with Republicans, who insisted on spending cuts larger than the increase in the debt limit in exchange for their votes. (A $2 trillion increase would likely get lawmakers through the 2012 election.) Democrats insist that any deal must include revenue increases in addition to spending cuts, while Republicans have said any tax hikes are off the table. The Democratic officials familiar with the negotiations predicted a deal that includes tax increases can win enough votes from Republicans to pass the GOP-led House, arguing that "there is an openness there [with Republicans] to some revenues."

The officials cited comments Wednesday by House Majority Leader Eric Cantor, who said that "if the president wants to talk loopholes [in the tax code], we'll be glad to talk loopholes," to bolster their case. But it's important to note that Cantor went on to say that "any discussion of loopholes must be accompanied by offsetting tax cuts," adding, "we are not for increasing revenues."

The officials nonetheless argued that the anti-revenue rhetoric from Republicans "isn't on the level" because "everyone knows a deal can't work without revenues."

The administration has set August 2 as the date at which the United States will exceed its $14.3 trillion debt limit, potentially leading to "a second recession or worse," according to Mr. Obama. Officials say the framework for a deal must be in place by roughly July 22to get the deal done in time.

The president has invitedcongressional leaders to the White House for continued negotiations Thursday.

  • Chip Reid

    Chip Reid is CBS News' national correspondent.

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