Obama calls emergency meeting on debt

WASHINGTON — President Barack Obama and congressional leaders are scrambling to find a way ahead on a debt deal after House Speaker John Boehner threw negotiations into crisis by walking out less than two weeks before the deadline to avoid a potentially catastrophic default.

A visibly frustrated Mr. Obama summoned Boehner, R-Ohio, to the White House for an emergency meeting Saturday morning with the three other leaders — Sens. Harry Reid, D-Nev., and Mitch McConnell, R-Ky., and Rep. Nancy Pelosi, D-Calif.

"We have run out of time and they are going to have to explain to me how it is that we are going to avoid default" on Aug. 2, the president told reporters at a hastily scheduled news after Boehner's announcement.

Boehner accepted the invitation even while arguing that President Obama bore the blame for the collapse.

John Boehner walks away from debt talks
CBSNews.com special report: America's debt battle

It was a major breakdown in negotiations between President Obama and the House Speaker. The talks fell apart over issues that have long divided Democrats and Republicans: Entitlement programs and taxes.

A clearly fed-up President Obama chastised Boehner for walking away from a deficit reduction deal worth nearly $3 trillion over the next decade after weeks of discussions, reports CBS News correspondent Whit Johnson.

"I've been left at the altar now a couple of times," Mr. Obama said Friday. "Can they say yes to anything? "

Obama, Boehner at war over debt talk collapse

The deal included $1 trillion in cuts to discretionary spending; and $650 billion in cuts to entitlement programs.

But it was $1.2 trillion in additional revenue that killed the deal for Republicans.

Boehner claimed the White House "moved the goal post" on revenue. "There was an agreement on some additional revenues until yesterday," he said.

Boehner said that agreement was for only $800 billion in additional revenue which would come from rewriting the tax code.

He argued the president's new proposal would weaken economic recovery.

"The extra $400 billion would have had come from increasing taxes on the very people that we expect to invest in our economy and to create jobs," he said.

This latest breakdown seriously dims the prospect that a large-scale deal to reduce deficits could be reached before the August 2 deadline.

But both sides are adamant: Default is not an option.

"At minimum, we've got to increase the debt ceiling. At minimum," Mr. Obama said. "I think we need to do more than that."

The political theater played out even as the deadline neared. Barring action by then, the Treasury will be unable to pay its bills. That could cause interest rates to rise, threaten the U.S. economic recovery and send shock waves around the globe.

The deadline pressure hasn't seemed to bring the parties closer, even though they all insist they do not want a default.

For the first time since talks began, President Obama declined to offer assurances that a default would be avoided, although moments later he said he was confident of that outcome.

Still, aides on both sides said there was agreement on gradually raising the age of eligibility of Medicare from 65 to 67 for future beneficiaries, and slowing the increase in cost-of-living raises in Social Security checks.

Even by the recent standards of divided government, Boehner's decision triggered an extraordinary evening Friday as the Democratic president and then the Republican speaker maneuvered for political position on this vital issue.

Unspoken, yet unmistakable in all the brinkmanship was the 2012 election campaign, still 18 months away, with the White House and both houses of Congress at stake.

President Obama devoted his weekly radio and Internet address Saturday to the impasse and urged Republicans to make a deal.

"We can come together for the good of the country and reach a compromise. We can strengthen our economy and leave for our children a more secure future," the president said. "Or we can issue insults and demands and ultimatums at each another, withdraw to our partisan corners and achieve nothing."

Rep. Jeb Hensarling, R-Texas, pressed the Republicans' sharply opposing view in his party's weekly address.

"If we're going to avoid any type of default and downgrade — if we're going to resume job creation in America — the president and his allies need to listen to the people and work with Republicans to cut up the credit cards once and for all," he said.