Boehner abandons goal of $4 trillion debt-reduction package

Democrats continued to insist on tax changes that would not pass muster in the conservative-dominated House, and Republicans wanted cuts to programs such as Medicare and Social Security that Obama and Senate Democrats would oppose.

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase,’’ Boehner said.

Without a lifting of the debt ceiling, Treasury Secretary Timothy Geithner has said that by Aug. 2, the nation will begin to default on the more than $14.3 trillion in outstanding debts the nation has collected after decades of runaway deficit spending.

The impasse leaves Obama and congressional negotiators back at the smaller package, which includes agency budget cuts and more modest changes to entitlement programs.

That package, which had been negotiated by Vice President Joe Biden and key GOP leaders, including House majority leader Eric Cantor, would come to somewhere between $2 trillion and $2.4 trillion in savings, allowing Congress to approve an extension of the federal debt ceiling into spring 2013.

Obama, whose aides had not yet responded to Boehner’s announcement at press time, had been cajoled by Boehner into pushing for what the speaker called “the big deal,’’ as opposed to the midrange package Biden and Cantor were assembling.

The larger package would have been the most significant compromise in taxes and spending of the past three decades, including cuts to Social Security and Medicare, reductions in Pentagon spending, and a large rewrite of the federal tax code.

The emerging deal, however, collapsed of its own ideological weight. Liberals were outraged at the proposals for entitlements, particularly a cut in the annual increase of Social Security benefits, and conservatives were opposed to the idea of raising federal revenues through the tax overhaul proposal, which they would have labeled one of the largest tax increases in history.

Democrats blasted Boehner’s actions.

“I really do think this is unfortunate. It’s very disappointing that the Republican fixation with protecting tax breaks for corporate special interests and the very wealthy has prevented them from agreeing to a broad and balanced deficit reduction plan that would be good for the country,’’ said Representative Chris Van Hollen, Democrat of Maryland.

Last night’s announcement capped a whirlwind three weeks in which the president and speaker engaged in a series of meetings that culminated last week with their decision to push for the biggest possible debt deal.

Boehner’s decision makes tonight’s summit all the more critical, as Obama, Biden, and the congressional leaders expected to attend must decide the next steps to avoid the default process.