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WASHINGTON (Reuters)-Republicans and Democrats, dug in their heels Friday as President Barack Obama prepared to wade into a polemical debate on taxes and spending to default on debt heading off of the US Government.
The White House has said that Obama would meet separately with democratic and Republican Senate leaders Monday in a bid to revive negotiations that collapsed when Republicans walked out Thursday to demand Democrats for tax hikes.
"The President is willing to make difficult choices, but he cannot ask the bourgeoisie, and elders to bear the entire burden to deficit reduction and sacrifice, while millionaires and billionaires ... are let off the hook," said White House spokesman Jay Carney aboard Air Force One.
Republicans on Friday ruled out any tax increases as part of an agreement to narrow stubborn budget deficits and increase the limit of U.S. debt. The Federal deficit is now $ 1.4 billion, among the highest levels compared to the economy since World War II.
Ceiling 14.3 billion U.S. debt must be increased before 2 August or the Treasury Department will run out of money to pay the Bills. Default on the debt could send markets plunging worldwide and increase the risk of another recession in the United States.
House Speaker John Boehner and fellow Republicans say any package that includes tax increases is no chance to pass the Republican-controlled House. Senate Republicans are threatening to block the measure if it includes tax increases.
"Tax hike cannot pass Congress. You might also ask us to herd unicorns through the Chamber of the Senate, "said Don Stewart, spokesman for Senate Republican leader Mitch McConnell. "Just can't happen."
Conservatives in Congress, including many Tea Party activists who are credited with winning the House for the Republicans in the election of 2010, have questioned whether there really is an urgent need to increase the debt limit. They have laid down tough prerequisites to win their votes including the passage of an amendment of the Constitution of balanced budget.
Democrats have broadened their demands in recent days to say that any package must include measures to revive the struggling economy, which could increase the deficit. Say they will not support a package that is based only on spending cuts.
"Make no mistake. We must be invoiced in any agreement, "said a senior Democratic Senator Charles Schumer.
Treasury Secretary Timothy Geithner said he was confident that Congress still could reach a budget agreement, but that would include some tax hikes.
"You have to have modest changes in revenue," Geithner said in New Hampshire. "There is no way to make a deal without it."=
ON THE TABLE
Democrats have eased back from their insistence that breaks the PERSONAL INCOME TAX rates need to rise to the richest Americans to focus instead on ending a wide range of tax on everything from corporate jets to subsidies for oil and gas.
They also proposed tax breaks that the rich, such as limiting deductions for families making more than 500,000 dollars a year for the benefit of closure.
Representative Chris Van Hollen, a Democrat who was involved in the failed talks led by Vice President Joe Biden said that Republicans had refused to move.
"What we've seen is all take and no give," he said.
A senior administration official said eliminating tax breaks and loopholes on corporate jets, energy companies and hedge funds and capping itemized deductions for the richest Americans-all the steps identified in the budget of Obama-2012 could save 400 billion dollars in 10 years.
"This is what they are throwing the measures approximately. Because somehow I think special loopholes for billionaires and millionaires, oil and gas subsidies-somehow I'm willing to go to the wall, for this, "said another senior administration official.
But he said a Republican source familiar with the talks Democrats were also pushing the repeal of "last in first out" (LIFO) accounting, which he said would cost producers billions of dollars, while capping itemized deductions would hurt hundreds of thousands of U.S. small businesses.
"They're not talking about some tax loopholes. You're talking about hundreds of billions of dollars. You can't get just going after corporate jets, "the source said.
The National Association of manufacturers estimated repealing LIFO, which allows companies to combine sales revenues against costs, inventory replacement, would raise taxes for u.s. companies to 50 billion dollars in 10 years.
Boehner said if Obama offered spending cuts that were at least the size of a debt limit increase-thought to be about 2 billion to $ 2.5 billion-and if new budgetary reforms were put in place, "he has my word that the House will act on it".
Those are requirements Republican leader Boehner and fellow Members have been expressing for months.
"We believe we can go forward, as anyone in these talks adopts an approach my way-or-the-road," said Carney.
(Editing by Peter Cooney)
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