WASHINGTON (CBSNewYork/AP) – President Barack Obama says he’ll keep calling meetings on deficit reduction and the government borrowing limit until there’s a deal, even though he and Republican lawmakers remain far apart.

New York City Mayor Bloomberg chimed in on the debate, saying Tuesday it was time for both sides to get real and make a deal.

“They’re all going to have to, in the end, stop what I would argue is posturing,” said Bloomberg. He said a federal government default would have serious consequences.

“It would have a catastrophic effect on our financial system and on our credibility around the world,” Bloomberg said.

1010 WINS’ Stan Brooks Reports From City Hall

Bloomberg said talk about deficit reduction and the debt ceiling need to be separated. He says that would increase the likelihood of a deal and reduce the odds of financial damage to the economy.

With compromise talks at a vituperative standstill, Senate Republicans unexpectedly offered to hand Obama new powers to avert a first-ever government default threatened for Aug. 2.

WCBS 880’s Peter Haskell With Mayor Bloomberg

Under a proposal outlined by Sen. Mitch McConnell of Kentucky, Obama could request — and likely secure — increases of up to $2.5 trillion in the government’s borrowing authority in three separate installments over the next year, as long as he simultaneously proposed spending cuts of greater size.

The debt limit increases would take effect unless blocked by Congress under special rules that would require speedy action — and even then Obama could exercise his authority to veto such legislation. Significantly, the president’s spending cuts would be debated under normal procedures, with no guarantee they ever come to a final vote.

McConnell made his proposal public a few hours before Obama presided over his third meeting in as many days with congressional leaders searching for a way to avoid a default and possible financial crisis.

Democratic officials who participated in the session said Obama did not reject the Senate Republican leader’s suggestion, but stressed it was not his preferred approach. A statement issued later in press secretary Jay Carney’s name said the president “continues to believe that our focus must remain on seizing this unique opportunity to come to agreement on significant, balanced deficit reduction.”

WCBS 880’s Pat Farnack With Jackie Calmes Of The New York Times

Other officials said participants at the meeting spent part of the time reviewing proposed spending cuts that were made by both sides during several weeks of negotiations led by Vice President Joe Biden, suggesting that negotiators had not given up on a deal to cut deficits.

There was little or no dispute among senior officials about the importance of avoiding default.

In an interview on CBS taped before the meeting, Obama said that without a deal to raise the debt limit, he could not guarantee that Social Security checks will be issued on Aug. 3 “because there may simply not be the money in the coffers to do it.”

House Speaker John Boehner, R-Ohio, interviewed on Fox News, pointed to turmoil rippling across Europe as evidence of what might happen if the United States defaults on its obligations.

In essence, McConnell’s proposal would greatly enhance Obama’s authority to avoid a default, while also virtually absolving Republicans of responsibility if one occurred.

At the same time, it would allow Republican lawmakers to avoid having to support an increase in the debt limit, something many of them find odious.

“Republicans will choose a path that actually reflects the will of the people, which is to do the responsible thing and ensure the government doesn’t default on its obligations,” McConnell said in a speech on the Senate floor. He also excoriated the administration for seeking tax increases along with spending cuts as part of an agreement to raise the debt limit, adding that as long as Obama is president “a real solution is unattainable.”

Boehner praised McConnell for doing “good work” with his recommendation but did not endorse it.

Other conservatives were less polite. Presidential hopeful Newt Gingrich tweeted his criticism almost as soon as the proposal was released. Rep. Louie Gohmert, R-Texas, said Republicans would be “agreeing to give up the best leverage that we could possibly have to get the country on track financially in return for an agreement that is completely unenforceable.”

At the same time, Boehner said he believed Obama was trying to reach a compromise on deficit cuts, “but their insistence on raising taxes is preventing us from getting there.”

The talks have revolved around attempts to meet Republican demands for deficit cuts at least as large as any increase in the debt limit. Negotiators have grown testy in recent days as Obama and Democrats pushed for higher tax revenue as part of the deal, a line Republicans say they will not cross.

Given the reaction from other Republicans, it seemed unlikely that McConnell’s proposal could show the White House and congressional leaders of both parties a way out of a deadlock that Obama and others said threatened calamitous results for an economy still struggling to recover from the worst recession in decades.

Yet it would obligate Obama to outline deep spending cuts, something Republicans have been trying to force him to do for months without much success.

Reductions as large as $2.5 trillion would almost certainly affect domestic programs seen as important by Democratic constituencies and by rank-and-file lawmakers, possibly including Medicare and Medicaid. Even if the cuts never took effect, Republicans would be able to call for votes, while identifying them as sponsored by the White House.

Any such proposals could also be used by Republicans in the 2012 campaigns, if only to blunt attacks made by Democrats.

The White House talks have been aimed at producing a compromise to cut projected deficits by trillions of dollars over the next decade while renewing the Treasury’s authority to resume borrowing.

The government reached its current $14.3 trillion borrowing limit several weeks ago, and Treasury officials have been relying on accounting maneuvers to continue to pay the nation’s bills without additional borrowing.

While Obama and Republicans maneuvered for political position, New York Mayor Michael Bloomberg said during the day that the two parties’ debate over deficit reduction “should not be tied to the debt ceiling.”

“America’s good name and credit are just too important to be held hostage to Washington gridlock,” he said in a speech a few miles away from the nation’s financial center of Wall Street.

Bloomberg’s concern echoed similar expressions by Obama and Treasury Secretary Timothy Geithner, and neither McConnell nor Boehner has disputed the assertion that a default could bring disaster to the economy that is growing so slowly that unemployment stands at 9.2 percent nationally.

Still, in remarks made before McConnell unveiled his proposal, Boehner said bluntly of the president, “This debt limit increase is his problem and I think it’s time for him to lead by putting his plan on the table — something that the Congress can pass.”

McConnell’s Senate speech was particularly pointed when he spoke of Obama, whose defeat in 2012 he has called his top political priority.

“Rather than find a way to bring government back to the people, the administration has committed itself to protecting the size and scope of government at the cost of job creation, economy growth and America’s status in the global economy,” he said.

Under his proposal, the debt limit would rise by $100 billion as soon as Obama requested the first of the three increases envisioned.

Officials have said that the government normally borrows about $125 billion a month to finance operations, meaning Obama could avoid a default for a brief period of time simply by asking for it.

Earlier Tuesday, Wisconsin’s Rep. Paul Ryan told CBS’s “The Early Show” that “we are already taxing our job creators and our businesses more than our foreign competitors are taxing theirs.”

LINK: More Coverage From NYT’s Jackie Calmes

Ryan said there should be over a dollar in spending cuts for every dollar in new borrowing authority.

(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

Comments (12)
  1. joannie says:

    Obama will cave and once again the middle class and those who rely on social security and medicare to survive will be the ones who carry this great country of ours on their backs!

    1. Nick says:

      Here’s a hint: if you have to lie to make your point, you may, MAY, have NO point. But than a lib who doesn’t lie is not a lib at all.

      FACT: 25% of households earned 55.7 percent of pretax income and paid 69.3 percent of federal taxes, So how are you parasites “carrying this country on your backs”?
      And this link is from a lib paper.

  2. Digitpro says:

    Why can’t these idiots understand the damage they have done to the economy for months and months! I have been out of work since April 2010 and they have been acting like young kids . Just agree on what you can agree on and make this happen then work on the other issues!!
    And the damage to the world’s economy just continues…Let’s kick them all out and start fresh next election by putting in people that own small to medium businesses…not millionaires who can not understand the effects of their actions

  3. NYSmike says:

    Wow! Reagan’s trickle down economics really worked…..NOT!

  4. Dirtyjew says:

    I don’t wipe my A$$ in order to save on toilet paper expenses. Perhaps others should do the same.

  5. Al Sharpton says:

    Democrats, socialism, Keyniasian econimics do NOT work…..This is the worst president in the history of the U.S.

  6. elvis says:

    Thank you, GOP, for bringing America to the brink of another crisis.

    Look at our $1.48 trillion budget deficit. Where does it come from?

    * $424 billion from lost revenue due to the Bush tax cuts

    * $969 billion due to spending above the rate of GDP. Spending under the Bush administration grew at an 8 percent annual rate compounded to add up to almost $1 trillion, about 40 percent in “entitlements,” almost 60 percent for defense

    * $134 billion due to the Obama economic stimulus plan, what’s left of it, after the 2008 financial crash.

    If you add it all together — if we didn’t do the Bush tax cuts and kept spending under control, we’d have a $47 billion budget surplus this year, even in a lousy economy (at least lousy for workers; corporations are doing great).

    Seventy percent of our problem was due to spending.

    Thirty percent was due to taxes.

    To solve it, you need to have both.

    Obama’s not talking about raising taxes. He’s talking about getting rid of tax breaks and allowing the Bush tax cuts to expire for people making more than $250,000 a year.

    The GOP needs to stop pointing fingers and accept some responsibility for putting us into this mess.

    1. Madame XXX says:

      Thank you, Elvis. Good post. And is that really the Rev. Al Sharpton who commented before you? If not, isn’t there something actionable there? The worst president ever? I guess he was asleep during the Bush years.

    2. Jumpinjohn says:

      Paul Ryan put a plan on the table. The President and the Dems shot it down. The President says a lot but puts nothing in writing. And by stoping the Bush tax cuts there is no way of knowing how much money would be collected. This profit does not exist “yet”. Job Creators will cut production , cut profit, thus cut employees. Great plan Mr. President. They must have taught him that in Community Organizer School.

      1. Jimmy Jam says:

        Wake up!

  7. al says:

    Change you can believe in!!!!!! Great Depression of the 2011!!!!! Very nice change. Thank you Hussein Obama for being our President!!!

    1. Jimmy Jam says:

      You clearly need to spend some time reading history and the news. You are ignorant of the facts my dear American.

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