Deficit Negotiators Hit Reset

Divisions on Spending Cuts and Tax Increases Remain as Debt-Limit Clock Ticks

By CAROL E. LEE, JOHN D. MCKINNON and NAFTALI BENDAVID
WSJ

President Barack Obama and Republican leaders in Congress clashed Sunday over the scope of an effort to cut the federal deficit, one that could be shorn of its most ambitious elements, including revamping the tax code and significantly reducing growth in benefit programs.

Mr. Obama urged the top eight congressional leaders from both parties during a meeting that lasted about 75 minutes at the White House to strive for the largest possible package, some $4 trillion over 10 years. Republicans, however, made a pitch for a scaled-down plan of roughly $2 trillion over 10 years that doesn't include about $1 trillion in tax increases the White House is seeking.

Republicans have tied a vote on raising the government's $14.29 trillion borrowing limit to a deficit-reduction deal, and the tone of the Sunday meeting was tense and confrontational at times.

Republican and Democratic leaders have said they won't let the U.S. default, but the Treasury Department says the government could begin defaulting on its financial obligations, including debt payments, after Aug. 2 if the debt ceiling isn't increased.

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