President Barack Obama summoned House Speaker John Boehner to White House after the Republican from Ohio threw the debt ceiling talks into disarray by withdrawing from discussions.
The President has also invited Senators Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.), along with Rep. Nancy Pelosi (D-Calif) to the White House talks Saturday morning.
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, said a visibly upset Obama.
Earlier, Boehner said he was walking out of the talks as the President was emphatic that taxes have to be raised. He also said Obama was adamant that we cannot make fundamental changes to our entitlement programs.
For these reasons, I have decided to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward, Boehner said.
Taxes and entitlement have been the crucial bones of contention between the warring Republicans and the Democrats as the administration is focused on raising the debt ceiling for the US Treasury. If consensus is not reached before Aug 2, the Treasury will face and unprecedented default.
The current ceiling of $14.3 trillion is the amount of debt the U.S. government can raise legally, and it includes money the Treasury owes to government trust funds like Social Security.
The republican opponents of the plan to lift the ceiling insist that the government should first commit to massive spending cuts and vouch for fiscal prudence. Some economists support this line, saying that a default will instantaneously solve the debt crisis inasmuch as it neutralizes the government's ability to raise funds to fill the revenue-spending gap. However, this is quite a radical line of thinking and many experts have pooh-poohed this proposition.
The two sides have locked horns on the debt ceiling issue, but no unanimity has been reached so far on how to tide over the fast approaching crisis.
Boehner had made it clear at the start of the talks that before the Republicans offer a lifeline to the government, the Democrats would have to agree to trillions of dollars of spending cuts. The Democrats aver that the republican opponents are endangering the country’s credit rating by refusing to raise the debt limit.