Key Republican pulls out of debt ceiling talks, negotiations on verge of collapse

Washington (CNN)-With only weeks to go before the country hits the debt ceiling, bipartisan negotiations were on the verge of collapsing as one of two Congressional Republicans walked away from the talks, and the other was unclear about future discussions.

House Majority Leader Eric Cantor withdrew from the negotiations Thursday, saying they had reached an impasse with Democrats over tax issues and it was time for President Obama to get involved to broker a deal that would pave the way for a vote to raise the debt ceiling this summer. Arizona Republican Senator Jon Kyl said that it would be difficult to continue negotiations with only one Republican at the table.

Talks planned for Thursday afternoon were scrapped after Vice President Joe Biden decided not to attend in light of Cantor’s announcement.

Cantor, who represented the House GOP in the discussions, said "there is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue."

Cantor called on President Barack Obama to step in. “I believe it is time for the President to speak clearly and resolve the tax issue," he said.

An aide to Kyl told CNN that he also feels that the talks have gone as far as they can go with the players involved and the President now needs to personally get involved.

Rep. Chris Van Hollen, one of the House Democrats involved in the meetings, said there was no indication at yesterday’s session that the Republicans would stop participating.

Van Hollen said he learned the news as he was leaving a meeting with the President Thursday morning and was “disappointed.”

“They had been proceeding well although there is no doubt that there were some very difficult issues that needed to be decided,“ Van Hollen told reporters.

The bipartisan group, led by Vice President Biden, has been meeting for weeks behind closed doors to discuss various proposals to cut spending, from both discretionary programs and entitlement programs, such as Medicare. They have released very few details about areas of agreement, but Cantor said the group made significant progress agreeing to trillions in spending cuts, and noted “we have established a blueprint that could institute the fiscal reforms needed to start getting our fiscal house in order.” They had originally hoped to reach some sort of tentative agreement by July 1.

Biden released a written statement Thursday commending the "progress" of the talks thus far.

"Over the past several weeks, the bipartisan debt talks have made significant progress on a blueprint for putting America’s fiscal house in order," he said. "Working together in good faith, we have found many areas of common ground and potential agreement on substantial savings...We have made real headway and laid the groundwork to get this done."

And he had a slightly different view of that progress, saying, "As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders."

"The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. For now the talks are in abeyance as we await that guidance. We stand ready to meet again as necessary," he continued.

The group was working toward an agreement that would raise the debt ceiling by more than $2 trillion with an equivalent amount of spending cuts over the next ten years. Treasury Secretary Timothy Geithner said he expects the country to reach the debt ceiling by August 2, effectively halting the nation’s ability to borrow money and forcing the government into default on its obligations.

Multiple Democratic sources claim Cantor backed out of the talks because he doesn't want his fingerprints on an agreement that could face opposition from many House Republicans.

Several sources familiar with the bipartisan meeting on Wednesday said that it was incredibly tense and difficult.

Democrats involved in the negotiations have repeatedly said increasing tax revenues, from proposals such as ending subsidies for big oil companies, or companies producing ethanol, should be considered as part of the deal. Van Hollen said there was no justification for opposing those items “if you are serious about reducing the deficit.”

But the Democratic source—who would not speak on the record about the closed talks–said the Republicans in the negotiations have refused to accept any proposals that end any subsidies. "They're not willing to accept a dime of tax increases, we call it closing tax loopholes"

A Republican leadership, who also asked not to be identified, said it was the Democrats holding up progress because they refused to accept major changes to entitlement programs.

Senate Republican Leader Mitch McConnell went to the Senate floor and echoed Cantor’s message.

"Either someone on the other side has forgotten that there is strong bipartisan, bipartisan, opposition in Congress to raising taxes or someone is acting in bad faith. We’ve known for some time that tax hikes would be a poison pill to any deficit reduction proposal,” McConnell said.

As Republicans were stressing their position to keep taxes off the table, the Democratic source maintained the GOP was continuing to push for major cuts to programs that they knew Democrats would oppose.

"Republicans want to cut Medicare, Medicaid and education and want deep cuts because they’re unwilling to cut tax loopholes that benefit special interests,” the source said.

Van Hollen warned that those conservative Republicans who were opposing any deal to raise the debt limit were endangering the economy. “One thing that would take a fragile economy and break it would be for the United States to default on its obligations so nobody should be playing a game of political chicken with this issue.”