Possible budget deal cuts $3 trillion
July 21st, 2011
03:00 PM ET
7 years ago

Possible budget deal cuts $3 trillion

Washington (CNN)– Talks between President Barack Obama and congressional leaders are focusing on a possible $3 trillion deficit reduction deal that would accompany a debt ceiling increase, congressional aides told CNN on Thursday.

The aides, who spoke on condition of not being identified, said the possible deal remained in limbo over disagreement on whether to extend Bush era tax cuts for families earning more than $250,000 a year, and nothing has been agreed to yet.

The possible deal would include spending cuts expected to total $1 trillion or more that were agreed to in earlier negotiations led by Vice President Joe Biden, the sources said. It also would reform entitlement programs by changing the eligibility age for Medicare over time and using a more restrictive inflation index for Social Security benefits, according to the sources.

On taxes, it would permanently extend the Bush era tax cuts for families earning less than $250,000 while allowing the cuts to expire at the end of 2012 for those earning more than that, the aides said. At the same time, the deal would include a commitment to reform the tax code next year, which is expected to lower all tax rates and eliminate loopholes and subsidies, the sources said.

However, the sources said, House Speaker John Boehner wants the deal to make all the Bush tax cuts permanent while keeping the commitment to tax reform. Republicans oppose any tax hikes, and their resistance has been a major obstacle to any deal in the negotiations so far.

Some sources said the deal would work in two stages, with spending cuts and a debt ceiling increase occurring right away, with the entitlement reforms and tax reforms occurring later.

House Majority Leader Eric Cantor told reporters on way to House floor, "I am unaware of any deal that has been struck. There are all kinds of options on the table."

A spokesman for House Speaker John Boehner – Michael Steel– tells CNN’s Kate Bolduan: "While we are keeping the lines of communication open, there is no 'deal' and no progress to report. We are still focused on the 'Cut, Cap, and Balance' bill that passed the House with bipartisan support, and hope the Senate will take it up as soon as possible."

Filed under: Budget • Debt • Deficit • President Obama
soundoff (35 Responses)
  1. GD

    "S&P said today that, even if Congress raises the debt limit in time to avert a default, it might lower the U.S. sovereign rating to AA+ with a negative outlook if it isn’t accompanied by a “credible solution” on the debt level." (Bloomberg) A credible solution is one that has both revenue increases & spending cuts, & that doesn't do damage to an already anemic economy. True compromise always requires tough decisions on all sides. That's what's been missing here.

    July 21, 2011 03:04 pm at 3:04 pm |
  2. Fair is Fair

    And there you have it. Obama, the empty suit that he is, caves. Weakness, thy name is Obama.

    July 21, 2011 03:16 pm at 3:16 pm |

    Use the 14th Ammendement to drive a short term extension of the debt ceiling if required Mr. President. You have broad lattitude to take unilateral steps.

    I can't vote for you in 2012 if you cut spending but don't get any tax revenue in this deal. It will be the final nail in your coffin with me. I need to know that you've got the negotiation chops I expect in my President. Don't blink. We need to cut the deficit, not just spending. Without surpluses, we will never pay down the National debt.

    Clinton was the last President to have surpluses of $88B, $122B & $230B in '98, '99 & '00. Tax rates were 3% higher then. We need to return to those fundamentals.

    July 21, 2011 03:16 pm at 3:16 pm |
  4. Democrat Class Warfare & Race Baiting - Destroying the economy, destroying the country

    Oh honestly! Not the "we'll do this later BS" AGAIN!!! Problem is IT NEVER GETS DONE!! More smoke and mirrors from DC to kick the can down the road and pretend something actually got done. If Americans want to get this country back on a solid financial footing, then they'll have to remove a lot Democrats from office. The Democrat Party of tax, spend & borrow is wrecking the country, just as they've done in California.

    July 21, 2011 03:21 pm at 3:21 pm |
  5. A Real Patriot

    See what can happen when we have a real leader as President? A statesmen among political hacks....

    Repubs just shot their wad-the House will be Red again in 2012!

    July 21, 2011 03:22 pm at 3:22 pm |
  6. GI Joe

    The Sermon on the Mount reads:

    You have also heard that our ancestors were told, ‘You must not break your vows; you must carry out the vows you make to the Lord.’ But I say, do not make any vows! Do not say, ‘By heaven!’ because heaven is God’s throne. And do not say, ‘By the earth!’ because the earth is his footstool. And do not say, ‘By Jerusalem!’ for Jerusalem is the city of the great King. Do not even say, ‘By my head!’ for you can’t turn one hair white or black. Just say a simple, ‘Yes, I will,’ or ‘No, I won’t.’ Anything beyond this is from the evil one (Matthew 5:33-37).

    “Most Republicans in Congress have signed a Mephistophelian pact. They have left their consciences in the pocket of Grover Norquist.” But these words from the Gospel of Matthew imply that Republicans who have signed these pledges have literally made a pact with the devil.

    July 21, 2011 03:23 pm at 3:23 pm |
  7. Rudy NYC

    However, the sources said, House Speaker John Boehner wants the deal to make all the Bush tax cuts permanent while keeping the commitment to tax reform.
    Sen. Boehner wants us all to go on a diet provided that we continue to eat his mandated junk food every day. The American people remember that the Republican party promised the cuts would be temporary. We haven't forgotten.

    July 21, 2011 03:23 pm at 3:23 pm |
  8. Canuck

    From an outsiders point of view the solution to the debt crisis is simple – slash defence spending – not social programs – and inrcrease taxes for the rich and corporations. Why is that so difficult to do , America??

    July 21, 2011 03:24 pm at 3:24 pm |
  9. Ken in NC

    If Republicans want "NO TAX INCREASES". Tell them "NO". Let our economy crash. We will suffer when it does but Republicans will suffer a worse fate. Republicans would not be able to get elected "Dog Catcher". If they don't like the way things are run then they can go and try to take over in China. See how that goes over witth the Chinese.

    July 21, 2011 03:25 pm at 3:25 pm |
  10. Too much bad news

    More BS from the GOP. If the tax cuts were supposed to expire and we need the money to eliminate some of the debt, then let's get on with it GOP!

    July 21, 2011 03:28 pm at 3:28 pm |
  11. The Greedy Old Pigs have declared class war on US!

    While there seem to be some good ideas in there, the devil is in the details. SS should be reformed by (a) lifting the maximum taxable income cap and maybe (b) raising the retirement age a year or two. Cutting cost of living increases, however, is a deal-breaker.

    July 21, 2011 03:31 pm at 3:31 pm |
  12. Call_Me_Conservative

    C'mon, John. It's a good deal. Grab it and run!

    July 21, 2011 03:32 pm at 3:32 pm |
  13. obayashi

    Interesting development. I hope this will continue until a deal is reach.

    July 21, 2011 03:36 pm at 3:36 pm |
  14. Mike

    These repulicans are not fit to be in the positions they are in. They are led by tea party extremist. Do not cave to these savages. Vote them out and keep them out.

    July 21, 2011 03:36 pm at 3:36 pm |
  15. Dominican mama 4 Obama

    Gee, just as soon as the President told Eric Cantor not to call his bluff becaue he would take it to the American people, people started scrabling and things started happenning!!
    Hmmm.....Evidently the President should've sung like a soprano a looooong time ago. If he had threatened to "OUT" the Rethugs and their adherence to private Pledges versus the oath of office that they all took, and their unshakeable allegiance to the upper 2% and their business contributor$ over their civic duty to the voters that put themin office, this whole issue would've been resolved without a flutter.
    Can't help but comment on the fact that even something as bipartisan and as necessary for the country's good standing as th debt ceiling debate the Rethugs have seized to spurn this President in the hopes that it will send any progress that he's made with the economy back to edge of the precipice.

    July 21, 2011 03:38 pm at 3:38 pm |
  16. Edie Simmons

    Before we have Black Friday tomorrowThey had time let's treat them like Kids put all your budget plans in a box and straws time is running out , The last minute plan

    July 21, 2011 03:38 pm at 3:38 pm |
  17. Dominican mama 4 Obama

    Pardon the typos.

    July 21, 2011 03:39 pm at 3:39 pm |
  18. RonB

    Would it not be in the best interest of the nation to go back to the pre-GWB era as far as taxes are concerned. I got enough money from the Bush tax cuts to buy a muffler for my car. Millionairs got enough to buy a car or two. On Social Security – raise the cap so that workers making up to $250,000 pay into the pay roll tax, one % of the additional revenue would be applied to Medicare.

    July 21, 2011 03:43 pm at 3:43 pm |
  19. Charles W. Skinner

    More drivel from the "anonymous" aides which are attempting to undercut the Conservative strong stance on NO TAX INCREASES FOR ANYBODY. When we start seeing NAMES attached to these "drive by releases" then we'll start taking them seriously. Until then, it's just "hope" that "change" in the Republicans is going to happen. NEWS FLASH: It's NOT going to happen.

    July 21, 2011 03:44 pm at 3:44 pm |
  20. obama victim

    Repubs 1 Barry 0

    July 21, 2011 03:51 pm at 3:51 pm |
  21. Sandra, Atl

    I am absolutely sick of Republicans and their no tax mantra. Why should you cut services to the poor and elderly while continuing to give big tax breaks to people who can afford it. And don't give me the crap about it creating jobs. It didn't the first time around and it didn't create any when they did it in December. I am totally sick of that ploy!

    July 21, 2011 03:51 pm at 3:51 pm |
  22. TOM

    "permanently extend the Bush era tax cuts for families earning less than $250,000 while allowing the cuts to expire at the end of 2012 for those earning more than that" WELL THEY KICKED THE CAN DOWN THE ROAD ON THIS ONE. If the Republicans get elected they will probably let them expire for the under 250,000 and keep them for those making above that amount.

    July 21, 2011 03:54 pm at 3:54 pm |
  23. gt

    how about this.. stop all the tax loop holes .. have a flat tax.. get everybody in the game... it takes more than one mule to pull a wagon...

    July 21, 2011 03:55 pm at 3:55 pm |
  24. AiyeSiss

    No taxes cuts for the rich or corporate America. PERIOD!

    July 21, 2011 04:04 pm at 4:04 pm |
  25. sevenseas

    S&P and Moody say we have to cut 4 trillion to keep out credit rating, so what good is cutting 3? Are thse immediate cuts or will they be like the ones under Bush Sr, where cuts were promised (to secure tax raises) in the future and then reneged on by the next congress (since one congress' promise does not bind the next)?

    July 21, 2011 04:04 pm at 4:04 pm |
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