Obama hosts debt talks

President Barack Obama is having friend and foe alike come to the White House to talk about cutting the budget deficit, with less than four weeks to avert a first-ever default on U.S. financial obligations.

Thursday’s talks will include top lawmakers in both parties. Negotiations are gaining urgency by the day, because Republicans are insisting on major cuts to the deficit as the price for approving legislation to maintain the government’s ability to borrow money and stave off a market-rattling default.

The negotiations are the first official sit-down since last month, when House Majority Leader Eric Cantor, R-Va., left talks that had been led by Vice President Joe Biden, citing an insistence by Democrats on raising taxes.

But Cantor went out of his way Wednesday to make clear that he bolted the Biden group over an administration proposal to limit the ability of upper-bracket taxpayers and small businesses to claim deductions — and he signaled a willingness to consider closing some tax loopholes for businesses as part of a broader budget pact.

“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” said Cantor, adding that any revenues raised from closing loopholes “should be coupled with offsetting tax cuts somewhere else.”

Cantor’s comments reflected important, if nuanced, flexibility by Republicans. His earlier position was that closing loopholes should wait for a comprehensive overhaul of the tax code. And he didn’t rule out using loophole revenues to extend existing tax cuts instead of paying for new ones.

In the Senate, however, GOP leader Mitch McConnell was against the idea. “To sort of cherry-pick items in the context of this current negotiation at the White House strikes me as pretty challenging,” he said.

Democratic officials allied with Obama said the president believes it would be easier to win bipartisan support in the House and Senate for a deal that embraces larger deficit cuts closer to the $4 trillion over 12 years that Obama proposed in April.

The officials, speaking on the condition of anonymity because of the delicacy of the talks, said the precise number was still in flux, but they said Obama would be making the case for more rather than less deficit reduction in his discussions with congressional leaders Thursday.

However, any larger figure would depend on agreement on a long-term deficit or spending cap, enforced by automatic spending cuts and, under Obama’s proposals, a tax-increase “trigger” that would be tripped if targets were not met. Negotiations within the Biden-led group on the idea of spending caps and tax triggers had reached an impasse, however, a GOP aide familiar with the talks said.

After a pugnacious news conference last week, Obama struck a far softer tone Tuesday in inviting lawmakers to the White House.

But on Wednesday, the gloves came off again. Obama attacked Republicans as defenders of wasteful and unfair loopholes, such as subsidies for highly profitable oil companies or a break given to companies that purchase private jets.

“The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars,” Obama said during a town hall that featured questions posed through the online social network Twitter.

Thursday’s session comes several days after Obama and House Speaker John Boehner, R-Ohio, met secretly at the White House to try to end political posturing and get negotiations back on track.

According to Democrats and Republicans familiar with the Biden discussions, the two sides had reached tentative understandings that could easily add up to almost $2 trillion — or even more — in budget cuts over the coming decade. The agreements were tentative at best but involved more than $1 trillion in cuts to the day-to-day budgets of domestic Cabinet agencies and the Pentagon, in addition to cuts to farm subsidies, federal employee pensions, college aid and federal health care programs.

“The Biden group produced a blueprint where I can envision us proposing and accomplishing over $2 trillion in savings,” Cantor said. “And that deal is still in the works.”

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Associated Press writer Jim Kuhnhenn contributed to this report.