WASHINGTON, (Reuters) – U.S. President Barack Obama clashed with Republi-can lawmakers yesterday in a fierce White House meeting on deficit reduction that left a deal in question as the clock ticked toward a debt default.
“Enough’s enough,” Obama said, according to a Democratic official familiar with the talks.
The meeting came as Moody’s Investors Service jolted Washington with a stark warning that the United States may lose its top credit rating in the coming weeks if the $14.3 trillion limit on America’s borrowing was not raised.
The warning sent the U.S. dollar tumbling against most major currencies. Stock fu-tures and debt prices also fell.
Eric Cantor, the No. 2 Republican leader in the House of Representatives, said the talks yesterday became so acrimonious that Obama walked out, but a Democratic aide called Can-tor’s account “overblown.”
“He said he had sat here long enough. No other president, Ronald Reagan wouldn’t sit here like this,” Cantor told reporters.
The White House and Congress must forge a deal to raise America’s debt limit by Aug. 2 or the government will run out of money to pay its bills and default on some obligations. But they have so far failed due to a sharp divide over taxes.
Federal Reserve Chairman Ben Bernanke yesterday said if the debt limit was not raised in time, the United States would pay its bondholders first. That would mean other payments, such as Social Security to the elderly, would be the first hit — a political nightmare for both lawmakers and the president.
Obama accused Republicans of partisan posturing that was keeping the two sides from agreement.
The president and lawmakers met for nearly two hours yesterday, to cut a deal. Republicans demand $2.4 trillion in spending cuts in return for supporting an increase in the debt limit. Democrats and Obama insist on tax increases for the wealthy as part of a deal.
The two sides will talk again today, and taxes will dominate the discussions.
The president has set a Friday deadline for agreeing a way forward, officials from both parties said.
Democratic officials said Obama has backed $1.7 trillion in cuts and is prepared to accept more. All sides back some $1.5 trillion in cuts, the officials said.
Cantor, however, said that would not be enough.
“At the end of the meeting, the president said … we’re going to have to decide by Friday which way we’re going. We ought to think about things we can do rather than things we can’t,” Cantor told reporters.
“So I asked him, in that spirit, Mr. President … if we look at the situation we are very far apart right now. If you want the full $2.4 trillion increase and you won’t sign anything else, I don’t know if we can get there.”
Obama repeatedly rejected proposals for a short term solution to the problem, officials said.
The specter of the Moody’s announcement hung over the tense meeting.
Treasury Secretary Timothy Geithner said Moody’s emphasized the need for deficit reduction in addition to a rise in the debt ceiling, potentially souring one Republican proposal that would allow Obama to lift the borrowing limit while putting off talks on deficit reduction for later.