- The Washington Times - Tuesday, June 28, 2011

Political leaders on Capitol Hill continue to talk past one another about how to solve the nation’s debt problems as the issue of taxes remains a critical sticking point in negotiations.

And with only five weeks left before the nation risks defaulting on its debt, all sides retreated to familiar talking points on the issue Tuesday, suggesting a compromise is far from sight.

“We’ve had a number of useful meetings,” Senate Minority Leader Mitch McConnell, Kentucky Republican, told reporters at the Capitol. “But I must say, I’m perplexed as to why the administration seems now to believe that tax increases … would be a good idea in this economy?”

Senate Majority Leader Harry Reid, Nevada Democrat, moments later accused Republicans of being inflexible and playing politics with the economy.

“The talk in Washington, as it should be, is about cutting our deficit. But to do so we have to deal with some hard truths,” Mr. Reid said. “But my Republican friends seem to be living in a fantasy world.”

The senators’ comments came a day after they met separately with President Obama to discuss ways to increase the nation’s debt ceiling - the legal limit within which the federal government can pay for its operations and debt - while also reducing the deficit. Neither the lawmakers nor the White House has offered specifics on what was discussed.

The administration continues to say it is optimistic a compromise can be reached soon.

“We believe there is the opportunity here for a substantial compromise on a significant deficit reduction agreement that is done in a way that is balanced and allows the economy to continue to grow and create jobs,” White House press secretary Jay Carney told reporters Tuesday.

When asked whether Monday’s meetings with the two Senate leaders produced specific results, the spokesman declined to offer any details.

Mr. Obama is scheduled to meet with Senate Democratic leaders Wednesday. The meeting had been slated since last week, Mr. Carney said.

The Reid and McConnell talks came after deficit reduction negotiations between Vice President Joseph R. Biden and a bipartisan delegation from Congress broke down last week.

All sides of the debate stress a need to increase the nation’s $14.3 trillion debt ceiling. Exceeding the limit could lead to a U.S. default on its loans, a scenario that would damage the nation’s credit rating and could trigger another financial crisis.

While the government actually reached the deadline last month, Treasury Secretary Timothy F. Geithner said he could juggle accounts until Aug. 2.

Republican leaders, pressed by a large contingent of tea party-backed members, have demanded that any deal include spending cuts to equal the amount the ceiling is raised - at least $2 trillion.

Republicans also have rejected Democratic proposals that tax increases on businesses be included in the deal.

Senate Minority Whip Jon Kyl, Arizona Republican, said the Democratic tax-increase proposals would hurt the job market because they would hit key components of the economy: small businesses, retailers and manufacturers.

“Most tax increases are very harmful to economic growth when you have the kind of sensitive economy that we have right now,” he said.

Democrats, in turn, have accused Republicans of falsely suggesting that they want to raise taxes on average Americans, saying instead they want to close certain “loopholes” for oil corporations and other large companies.

“We all know we must cut the deficit, but we need to do it by targeting excess and wasteful spending,” Mr. Reid said.

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