Democrats Fret Obama May Be Caving on Debt Deal

On Thursday, Capitol Hill exploded with news that President Obama and House Speaker John Boehner might be close to a debt ceiling deal with $3 trillion in budget cuts--and nothing immediately in revenue. With less than two weeks before the Treasury Department's August 2 deadline to raise the debt ceiling, Democrats are terrified that Obama might be ready to cave on taxes.

[Did the Gang of 6 Wait Too Long?]

Throughout the debt ceiling fight, the Obama administration and Democrats in Congress have insisted that any deficit reduction plan must come from a mix of spending cuts and revenue increases, especially if the cuts come from entitlement programs such as Medicare or Social Security. Republicans, especially those in the House, have refused to consider tax increases of any kind. All that's left between the two sides is about $1.5 trillion in other cuts agreed to during the negotiations overseen by Vice President Biden, which isn't enough for the big deal which Democrats and Republicans had hoped to achieve.

According to a congressional aide, the sides are looking at a deal which would cut $3 trillion in budget cuts over the next 10 years, and would not immediately increase revenues. Such a deal would have to include significant entitlement program changes, a bitter pill for Democrats. As word of a potential deal spread, officials from both parties furiously pushed back against the rumors. "[The President] believes we need a balanced approach that includes revenues," White House spokesman Dan Pfeiffer wrote on Twitter, calling the reports "inaccurate." And during a caucus lunch meeting with White House Budget Director Jacob Lew, Democrats were furious about such a deal, according to sources with knowledge of the meeting. After the meeting, Senate Majority Leader Harry Reid also threw cold water on the idea. "This can't be all cuts. There has to be a balance. There has to be some revenue in the cuts," he said. "My caucus agrees with that. I hope the president sticks with that. I'm confident he will."

[Vote now: Will there be a debt ceiling deal?]

Following secret negotiations often feels like the old parable about the blind men who are unable identify an elephant--it's hard to understand individual bits of news without knowing the whole picture. Is Obama really ready to deal, or was this just a gambit to prove to his caucus wouldn't go along with a cuts-only measure? Democrats, already demoralized about past deals with the GOP, don't seem likely to agree to such a compromise. But there are some reasons why the White House might be ready to cut its losses and cut a deal with Republicans. The Gang of Six plan, which seemed to offer some hope of a way forward, simply came too late. Credit rating agencies are increasingly pushing for a larger deal, threatening to give America a credit downgrade if a smaller deal is passed. Obama may soon be forced to pick his least preferred option.

--Read about how a debt downgrade would harm America.

--See a slide show of 6 ways to raise the debt ceiling.

--See a collection of political cartoons on the budget and deficit.