House Republicans emerged from a White House meeting with President Barack Obama indicating they broke no new ground in negotiations to raise the nation’s debt ceiling in exchange for reductions in spending. Republican leaders, including House Speaker John Boehner, said the private session in the East Room focused on the impact of the government’s debt on the economy and jobs.
“‘If we’re going to get serious about creating jobs in America, we’ve got to reduce some of the uncertainty,” Boehner said outside the White House. “Some of that uncertainty is caused by the giant debt that is facing our country.”
Republicans are holding to their demand that spending cuts exceed the needed increase in the government’s legal debt limit, he said. The meeting followed the House’s 97-318 vote yesterday defeating a measure that would have raised the $14.3-trillion debt limit by $2.4 trillion without spending reductions.
Negotiations over increasing the debt ceiling as part of a package of spending cuts began May 5, led by Vice-President Joe Biden. There have been four meetings between the vice president and six congressional leaders. Biden has said progress is being made, and that negotiators are trying to find savings of $1 trillion over 10 years.
Boehner, an Ohio Republican, released a statement earlier today signed by more than 150 economists supporting the link between spending cuts and the debt limit.
“Increasing the debt ceiling without significant spending cuts and budget reforms will send a message to American job creators that we are still not serious about ending Washington’s spending addiction, and this will bring further harm to private- sector job growth in America,” Boehner said in the statement.
House majority leader Eric Cantor, a Virginia Republican, said he will continue to press for deficit reductions without raising taxes. Obama meets with the House Democratic caucus on the same subject at the White House tomorrow.
The Standard & Poor’s 500 Index slipped 1.1 per cent at 12 pm in New York and the Stoxx Europe 600 Index sank one per cent as data on jobs and manufacturing fueled concern that economic growth is slowing.
The cost of insuring US government debt against losses for one year with credit default swaps is rising while the price of protection over longer periods has fallen, as investors bet the standoff over raising the debt ceiling may drag into August. Credit default swaps that expire in one year rose to 47.425 basis points as of yesterday from 23.74 basis points on May 16.
