The Washington Times - July 23, 2011, 09:36AM

Why did debt ceiling talks on Friday fall apart to begin with? A few hints lie within President Obama’s own speech on Friday night, the the Gang of Six plan’s tax details, and Speaker Boehner’s morning meeting with the GOP Conference.

President Barack Obama said in his remarks on Friday night that Speaker John Boehner, Ohio Republican, “left him at the altar a couple of times” and that he had an “expectation” that Mr. Boehner would go to the GOP House caucus and ask “them to do the tough thing but the right thing” : (emphasis is mine)


PRESIDENT: Well, with respect to my relationship with Speaker Boehner, we’ve always had a cordial relationship. We had very intense negotiations — I’m going to have my team brief you exactly on how these negotiations proceeded. Up until sometime early today when I couldn’t get a phone call returned, my expectation was that Speaker Boehner was going to be willing to go to his caucus and ask them to do the tough thing but the right thing. I think it has proven difficult for Speaker Boehner to do that. I’ve been left at the altar now a couple of times.

Speaker Boehner told reporters early Friday evening that the White House “moved the goal post” on the debt ceiling talks and demanded $400 billion in tax hikes:

BOEHNER: We had an agreement on a revenue number — a revenue number that we thought we could reach based on a flatter tax code with lower rates and a broader base that would produce more economic growth, more employees and more taxpayers, and a tax system that was more efficient in collecting the taxes that were due the federal government. 

There was an agreement on some additional revenues until [Thursday] when the president demanded $400 billion more, which was going to be nothing more than a tax increase on the American people, and I can tell you that Leader Cantor and I were very disappointed in this call for higher revenue.

Why would the president do this? Apparently, according to the NY Times, a proposal had been carved out that would trigger the repeal of the health care law’s individual mandate and hike taxes on the wealthy if both parties cannot agree to a tax reform package by 2012. 

Boehner may have been ready to bring this proposal to his caucus before Mr. Obama decided to changed the conditions. It is likely President Obama caught wind of the details of the Gang of Six’s plan, where three Republican Senators agreed to higher tax increases than what he put forward to Speaker Boehner. According to Marc Thiessen at the Washington Post: (emphasis is mine)

Sen. Kent Conrad is claiming that if the Congressional Budget Office scored the “Gang of Six” deficit reduction plan, “it would find net tax relief of approximately $1.5 trillion.” This is deeply misleading. Far from a net tax cut, the Gang of Six plan would result in a massive tax hike of as much as $3 trillion. Democrats understand this — which is why President Obama was so quick to embrace the plan.

President Obama probably changed the terms of what he initially proposed to Speaker Boehner, because he did not want his proposal to have less tax hikes than a proposal that was agreed to already by three Republican Senators.

Speaker Boehner was likely going to tell his conference on Friday morning President Obama’s original proposal, but since Mr. Obama changed the terms, as Speaker Boehner pointed out, no proposal was presented to the Republican caucus.

Republican leaders are back at the White House re-negotiating the terms of the debt ceiling deal. The biggest fear for everyone in the game, however, is not necessarily when August 2 comes, there is no deal and a default happens. The biggest fear is when August 3 comes. There is no deal and the country does not come to an apocalyptic end through a financial default. Everyone’s credibility is being questioned at that point. 

As I wrote before in June, August 2, is the fourth doomsday date the treasury department has put forth as the deadline for a default if the debt ceiling is not raised.

There were already rumors on the hill hinting the August 2 date will be pushed back again to mid-August. So what does August 2 mean anyway? Maybe just a longer vacation and more campaign time for members if they can get the debt ceiling resolved before then.