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Top Republican Cantor exits budget talks
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Jun 23, 3:20 PM (ET)

By ANDREW TAYLOR

(AP) Vice President Joe Biden returns to Capitol Hill in Washington, Tuesday, June 21, 2011, for...
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WASHINGTON (AP) - House Majority Leader Eric Cantor pulled out of talks with Vice President Joe Biden on a deficit reduction-debt ceiling deal, saying they had reached an impasse over Democratic demands for tax increases to be paired with spending cuts wanted by the GOP.

The Virginia Republican said in a statement that the Republican-dominated House simply won't support tax increases, and that he wouldn't participate in the budget meeting scheduled for Thursday. Cantor said that it's time for President Barack Obama to weigh in directly on the budget because Democrats insist on negotiating some tax increases.

Sen. Jon Kyl of Arizona, who is representing Senate Republicans in the talks, also dropped out. White House press secretary Jay Carney declared the talks "in abeyance" but said they had been successful in identifying areas of common ground.

The GOP moves seem aimed at drawing Obama more directly into the talks. Cantor expressed frustration earlier this week that the president had not been more involved. Whether the tactic generates hard feelings that could jeopardize an agreement remains to be seen.

House Speaker John Boehner, an Ohio Republican, met with Obama Wednesday night at the White House to discuss the debt limit, Carney said.

Senate Majority Leader Harry Reid shrugged off Cantor's announcement. "I'm disappointed that he would walk out, but obviously he felt he couldn't do any more and wanted to kick it up to Boehner," he said.

Officials have said repeatedly in recent days they expected that those involved in the Biden-led talks would turn their work over to Obama, Boehner and other congressional leaders by week's end.

In the wake of Cantor's announcement, both Democrats and Republicans publicly doubled down on positions that are at odds with achieving an agreement.

"President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit," said Senate Republican leader Mitch McConnell, R-Ky. "He can't have both."

(AP) Vice President Joe Biden arrives on Capitol Hill in Washington, Tuesday, June 21, 2011, for...
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"It will take Democratic votes to pass any debt-ceiling agreement," said Sen. Chuck Schumer, D-N.Y. "As a result, certain things are going to have to be true. We cannot make cuts to Medicare benefits. We have to allow for revenues like wasteful subsidies for ethanol and oil companies. And we have to do something on jobs."

Cantor said that plenty of progress has been made in identifying trillions of dollars in potential spending cuts to accompany legislation to raise the $14.3 trillion cap on the government's ability to borrow money. Passage of the legislation this summer is necessary to meet the government's obligations to holders of U.S. Treasuries. The alternative is a market-shaking, first-ever default on U.S. obligations.

Senate Finance Committee Chairman Max Baucus, D-Mont., said that including tax increases on the wealthy is only fair, and that he's disappointed that Cantor has left the talks.

Baucus said that almost every deficit reduction deal in the past has involved a mix of tax increases and spending cuts. He said upper income Americans have seen a significant increase in wealth, so balancing the budget only through cuts in programs that serve the middle class and the poor is not fair.

"Revenues must be included so everyone can participate in addressing a critical national problem," Baucus said.

(AP) In this June 13, 2011 file photo, House Majority Leader Eric Cantor, R-Va., meets with...
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Cantor said that once the tax issue is solved, negotiators could quickly seal agreement.

"It is time for the president to speak clearly and resolve this tax issue," Cantor said. "Once resolved, we have a blueprint to move forward to trillions of spending cuts and binding mechanisms to change the way things are done around here."

The Biden-led group has been meeting since early May, trying to come up with areas of agreement on curbing a budget deficit that's requiring the government to borrow more than 40 cents of every dollar it spends. Areas of tentative agreement include trimming farm subsidies, auctioning electromagnetic spectrum to communications companies, and cutting student loan subsidies.

But with Republicans unwilling to accept some higher taxes - even in the wake of a sweeping Senate vote to eliminate the ethanol tax subsidy - Democrats were unwilling to agree to tougher steps like curbing Medicare and Medicaid.

All along, it was anticipated that the Biden group would only be able to get so far and that the toughest decisions, such as taxes and cuts to federal health care programs, would be kicked upstairs. Obama and Boehner sealed agreement in April on legislation to fund the government through the end of September.

"I would to expect to hear from (Obama)," Boehner said Thursday. Of Cantor's decision, the House speaker said: "I understand why he did what he did. I think those talks could continue if they're willing to take the tax hikes off the table."

There are only 5 1/2 weeks remaining until an Aug. 2 deadline for enacting an increase in the nation's debt limit to prevent a U.S. default. Economists warn that could damage the nation's credit rating and force the government to pay higher interest rates to continue to borrow the $125 billion a month it needs to finance its operations.

But increasing the borrowing cap is a politically poisonous vote for lawmakers, especially the tea party-backed Republicans controlling the House. Even while there's agreement between Obama and top congressional leaders that the debt cap simply has to be raised, a majority of the public - especially core conservative GOP supporters - says the debt limit shouldn't be lifted.

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.




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