Possible budget deal cuts $3 trillion
July 21st, 2011
03:00 PM ET
12 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. Bingham

    3 Trillion is light and the GOP better not mess with the rates over $250K. That is a sweet spot for small business owners and they know it so that would be a mistake for the country and for those congressman if they want to keep their seats. Obama has already pushed unemployment numbers over $400 for the last 15weeks and has been an utter failure and this would only be icing on the cake for narcissist and chief.

    July 21, 2011 04:14 pm at 4:14 pm |
  2. Randy, San Francisco

    The big question is whether or not Speaker Boehner can get the votes from House Tea Party Republicans.

    July 21, 2011 04:15 pm at 4:15 pm |
  3. Jordan

    I find it amazing that a seemingly routine debt ceiling change (its been done at least a dozen tines before) is being used by both sides to try and implement their version of "reform". I think it's unfortunate that it takes a possible economic collapse to get either side to do anything.

    July 21, 2011 04:15 pm at 4:15 pm |
  4. vic , nashville ,tn

    Eric Cantor "I am unaware of any deal that has been struck” that is true without Eric Cantor approve there is no deal powerful man in the DC

    July 21, 2011 04:17 pm at 4:17 pm |
  5. Me

    You republicans are so stupid and when the dust settles, I'll tell you why

    July 21, 2011 04:18 pm at 4:18 pm |
  6. Haji

    "Permanent" tax cuts? Doesn't Boehner's intelligence tell him there may be contingencies down the road negating such foolishness? These Teapublicans sure are both inflexible and rigid.

    July 21, 2011 04:20 pm at 4:20 pm |
  7. Rudy NYC


    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??
    Good question. Because the hero of the Republican Party invented a new strategy in the 1980s. He tripled the defense budget by creating a convoluted spider web of contractors and subcontractors. Reagan enacted massive "trickle down" tax cuts to the job creators. All of this line the pockets of those with wealth. It moved us closer to the ideal of capitalism, that being where your one and only product/export is capital. No manufacturing costs, no salaries to pay. Just a pure revenue stream with no costs associated with it to support it. The US is moving into the intermediate stage now, which is called a plutocracy.

    July 21, 2011 04:20 pm at 4:20 pm |
  8. hidra

    I think it's sort of funny that the republicans have actually managed to con everyone into treating the repeal of a 3% tax cut for the rich with the same consideration as huge cuts in social spending. I've never thought so many poor people would get so ravenous over rich people not having enough money, and actually demand that ever poorer people should suffer so that these rich people can have more.

    If only Obama weren't black, we wouldn't have to deal with the alarming judgement imbalances of the poor conservatives.

    July 21, 2011 04:22 pm at 4:22 pm |
  9. taxed

    Get rid of the EITC and the Child Tax Credits – what is fair to the taxpayers about having to pay other people to have more kids than they can afford?

    July 21, 2011 04:29 pm at 4:29 pm |
  10. kyle

    The President is talking to the wrong people on the deficit deal, the GOP puppets has no say in the matter, he should be talking to their puppet master, the billionaire brothers.

    July 21, 2011 04:32 pm at 4:32 pm |
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