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No Debt Deal Imminent, but Discussions Under Way

The White House and Hill sources pushed back on a report Thursday afternoon that President Barack Obama and Speaker John Boehner (R-Ohio) are “closing in” on a “major budget deal” to cut into the nation’s deficit.

An article on the New York Times’ website Thursday stated that Congressional leaders were informed of the pending deal between Obama and Boehner, but top Hill aides denied such conversations took place.

Still, there were definite signs that the “grand bargain” was back on the table in negotiations between the Hill and the White House.

Rep. Chris Van Hollen, an ally of Pelosi’s, said he was not informed of any progress between Obama and Boehner. But the Maryland Democrat did say, “There has been a meeting of the minds, at least, for now” about reaching a grand bargain.

“There are a lot of people who were very skeptical about whether that would happen, but I think both sides remain focused on that even as discussions about Plan B” continue, said Van Hollen, the Budget ranking member and an original member of the bipartisan deficit reduction group led by Vice President Joseph Biden.

One Congressional aide said the administration briefed leaders on the potential for a deficit reduction deal with House Republicans that would not include tax revenue changes but would include the “promise” of a future deal on tax reform that would eventually bring in more revenues. The aide said the potential agreement would include “significant cuts, including to entitlements, but only the promise of revenues in a future, hypothetical tax reform deal. There would be no up-front, guaranteed revenues.”

But that possible deal appeared far from done.

Senate Majority Leader Harry Reid (D-Nev.) said the White House had called during a contentious Democratic caucus meeting Thursday to say there was no agreement. He declined to say which official called him.

“I’ve been told a call came in from the White House during this meeting that there’s no agreement, that they’re working toward agreement,” Reid told reporters after the caucus lunch.

“All I have to say is this: The president has always talked about balance. There had to be some fairness in this, that this can’t be all cuts, there has to be balance. There has to be some revenue,” Reid added.

If a deal was reached between the president and the Speaker, it would not be their first attempt. Obama and Boehner, who met at the White House with Minority Leader Eric Cantor (R-Va.) on Wednesday evening, had been working on a sweeping $4 trillion budget agreement earlier this month before Boehner walked away from the table. The Treasury Department has warned the debt limit must be increased by Aug. 2, leaving lawmakers with less than two weeks to craft a deal to avert a potentially catastrophic default.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” Boehner spokesman Michael Steel said in a statement. “We are still focused on the ‘Cut, Cap, and Balance’ bill that passed the House with bipartisan support, and hope the Senate will take it up as soon as possible.”

A spokesperson for Cantor also denied the report.

The news of the second iteration of the Boehner-Obama deal broke while White House spokesman Jay Carney delivered his daily briefing, Senate Republicans hosted a press conference on their pending Cut, Cap and Balance bill and Senate Democrats lunched on the second floor of the Capitol.

Carney echoed Hill sources in rejecting the closeness of an agreement.

“The report that we are close to a deal is incorrect,” Carney said. “There is not a participant in these negotiations of either party or either house that does not know what the general framework of a larger deal would look like … the parameters of a significantly sized deal are clear.”

But Carney cautioned that Obama and Boehner are not the only players to consider. “There’s not just one dance partner here — this is something that has to get through both chambers of Congress. It’s not just a matter of getting these two men to agree,” he said.

The White House spokesman expressed hope that a “grand bargain” would still emerge. The possibility of a major deficit reduction deal appeared to find renewed momentum this week when Obama expressed optimism about a broad deal outlined by the Senate’s “gang of six.”

Obama indicated he would prefer such a deal over the fallback option on which the Senate might act. Senate leaders are tentatively slated to put the legislative gears in motion this weekend on a package crafted by Reid and Minority Leader Mitch McConnell (R-Ky.) that would allow Obama to extend the debt limit three times through the 2012 election, but Congress could vote on resolutions of disapproval. However, that proposal would not mandate the deep savings lawmakers on both sides of the aisle would prefer, even though Obama would be required to identify offsets for lawmakers.

Although representatives on all sides were careful to say there was no progress to report, small signals across the Capitol indicate there could be some movement toward some form of agreement, no matter the size. White House Legislative Director Rob Nabors and Office of Management and Budget Director Jacob Lew were on the Hill huddling with lawmakers Thursday, after a day of various meetings between the leaders with the president and among themselves.

Lew also downplayed talk of a deal, as well as reports that the agreement in the works would not include tax changes.

“We’ve been clear that revenues have to be part of any agreement,” Lew told reporters.

He said multiple conversations are going on at various levels to try and resolve the issue.

Ultimately, however, it is unclear what has changed — especially within Boehner’s conservative caucus — that would make a sweeping deal that includes tax reform more palatable than it was two weeks ago. Boehner did meet twice with his freshman Members on Wednesday — first with the whole group in a formal meeting and then with a smaller group later that night, reportedly over pizza.

Jessica Brady and Steven T. Dennis contributed to this report.

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