The deal with Obama, right, 'was never really close,' Boehner, left, wrote in a letter to the House. Debt talks breakdown gets personal

Debt talks between President Barack Obama and Speaker John Boehner broke down again Friday amid a striking display of public recriminations between the two men and Republicans accusing the White House of upping its demands for new revenues after a rival deficit reduction plan had emerged in the Senate.

The decision left Congress scrambling to find some alternative path around the threat of default Aug. 2. Obama called the speaker and three other top House and Senate leaders to the White House on Saturday at 11 a.m. to continue negotiations.


But the tone of the breakdown was far more personal than the last disruption July 9, with warring press conferences Friday night and the White House complaining of an almost full day in which Boehner failed to return a presidential phone call trying to save the deal.

“Can they [Republicans] say yes to anything?” Obama said. “… I have been left at the altar a couple of times now.”

Boehner shot back at his own news conference: “Dealing with the White House is like dealing with a bowl of Jell-O,” Boehner said. “It’s the president who walked away from his agreement and demanded more money at the last minute.”

The speaker has said that he needs a bill in hand by Monday to ensure House action by midweek and still leave enough time for the Senate to act before the Treasury runs out of money. Prior to the breakup, discussions were already underway among Senate leaders Friday about how to proceed with a fallback, and there has been speculation of a four to six week extension to get past the immediate crisis.

But this short term approach faced united Democratic opposition after the collapse, with Senate Majority Leader Harry Reid saying flatly Friday night that it would be “unacceptable.”

“The deal was never reached, and was never really close,” the speaker wrote in a letter to House members released at 6 p.m. — after the financial markets had closed. “In the end we couldn’t connect. Not because of different personalities but because of different visions for our country.”

Yet even as the letter was going out Friday evening, Obama walked into the White House briefing room to declare that Boehner had walked away from “an extraordinary deal.”

“I just got a call a half hour ago from Speaker Boehner who indicated that he was going to be walking away from negotiations with the White House for a big deficit reduction package,” Obama said. “I think we should have moved forward with a big deal. … It is hard to understand why Boehner would have walked away from this deal.”

Indeed, despite Boehner’s disclaimer, the outlines of a $3 trillion to $3.5 trillion deficit-reduction package had been in place, including what would have been substantial savings from government health programs including Medicare and $1.2 trillion from appropriations over the next decade.

At one level, the numbers are pumped up by also counting $1 trillion in alleged long term savings related to winding down military operations in Iraq and Afghanistan. But an estimated $243 billion in often gritty detailed program cuts were assumed from non-health related government benefits including farm subsidies and federal worker retirement plans.

Republican leadership aides, who briefed reporters on the talks, credited the administration with committing to structural changes to Medicare as well to try to bend the cost curve in a second 10 year period after 2021. It appears the two sides were within $5 billion of one another over setting caps for 2012 discretionary appropriations between $1.045 trillion and $1.040 trillion.

It was a significant down payment then toward deficit reduction, but as was the case three weeks ago, tax policy proved a major stumbling block even when the two sides initially thought they had the makings of a deal built around the shared goal of tax reform.

Obama insisted that the “goal posts” had never changed and there remains some dispute as to how hard the president pushed for additional tax revenues.

But from the Republican account, the administration had agreed last Sunday to step back from its earlier July 9 demands to raise an additional $400 billion from tax reform. But then put the same number back into play this week after the bipartisan Senate Gang of Six announced its proposal Tuesday which assumes substantially more new revenue for deficit reduction.

In both cases, the Obama-Boehner talks as well as the Senate gang, the goal was to complete reform by the end of 2012, when the Bush era tax cuts are due to expire. And to guide this reform, each appeared to rely on a revenue baseline developed by the presidential debt commission last December.

Unlike the more rigid projections used by the Congressional Budget Office, which assumes all the tax cuts expire, the commission baseline sets a more plausible target that assumed some of the more popular would survive. These would include middle-income tax breaks, for example, relief from the alternative minimum tax and a more moderate version of the estate tax cuts now in effect.

As scored by the White House, that baseline is about $36.288 trillion over 10 years, or almost $2.7 trillion under the comparable CBO number.

It is in this range that the bargaining has focused.

Boehner was willing to accept the $36.288 trillion target as the “ceiling” for reform, and that represented a real concession on his part. The number is about $800 billion above what taxes would be if all the current breaks were extended and about $1.4 trillion above the even lower revenue target of $34.9 trillion set by the House budget in April.

At a White House meeting last Sunday, Treasury Secretary Timothy Geithner signed off, Republicans said, on the Boehner proposal — which was a concession in turn by the administration since it had shot for a target closer to $36.7 trillion in prior talks.

With that potential compromise in place, Boehner felt encouraged to proceed with the talks. But circumstances changed, Republicans said, after the Gang of Six came out with its plan that assumed an estimated $37.5 trillion target or $1.2 trillion in added revenues beyond the commission baseline.

This put the White House is an awkward position since liberal Democrats were sure to demand as much especially with the domestic spending cuts assumed in the Obama-Boehner negotiations.

A GOP leadership aide said as early as Tuesday evening that the White House was asking to go up to $36.6 trillion — a number not far off what the president had wanted in earlier talks with Boehner. This in turn put the speaker in an awkward situation, requiring him to backtrack and face the wrath of anti-tax tea party forces in his conference.

The administration would argue that the Gang of Six had less impact than Republicans insist. And from the White House perspective, the package was always evolving: as more savings were agreed to, the president needed to balance that politically with more revenues.

The White House said it was never intended to be a make-or-break demand, but more along the lines of hoping for some give on Boehner’s part. Republicans countered that Obama already knew what the speaker’s bottom line was, and Boehner opted not to call back Friday except when he delivered the message that he was walking away.

House Democrats, whose votes will be needed by the speaker on whatever fallback plan is chosen, were unsparing.

“Speaker Boehner’s adult moment is long overdue,” said Minority Leader Nancy Pelosi, who will be at the White House meeting Saturday. And both she and Minority Whip Steny Hoyer warned against pursuing a short-term solution.

“The markets have made clear that a short-term extension is not sufficient and would result in very serious consequences,” Hoyer said. “Democrats have made it abundantly clear we will not accept a short-term deal, but Republicans have once again refused to negotiate for the long term.”