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STALEMATE ON DEBT LIMIT HOLDS FIRM

McClatchy Newspapers

Battle lines in federal debt talks sharpened markedly Thursday when the Senate's top Democrat rejected a proposal for $2 trillion in budget cuts as demanded by House Speaker John Boehner, saying any cuts must be accompanied by action on closing tax loopholes.

"You can't do $2 trillion just in cuts," said Senate Majority Leader Harry Reid, D-Nev., in an interview in his Capitol office. "There has to be a mix of spending cuts, including defense, there has to be a more fair apportionment of tax policy in this country."

Republicans have resisted using tax reform to rein in deficits as Congress and the White House try to break a stalemate over raising the nation's debt limit by Aug. 2 to avoid a first-ever federal default. Boehner's office reiterated Thursday that tax hikes would not be "on the table" in talks.

Reid, the Senate majority leader, said that negotiations are likely to drag until the 11th hour, a prospect certain to send shudders through the financial markets and fuel political debate.

Reid's comments came as budget talks unfold on various fronts across Washington, and as Democrats and Republicans seek political advantage, especially among independent voters that can swing elections.

Polls show Democrats would find popular support for raising taxes on high-income earners and for ending corporate tax breaks, a stance Republicans have resisted as they try to shrink the size of government.

The rhetoric from Reid and Boehner is reminiscent of the showdown earlier this year over a 2011 budget standoff that almost shut down the government.

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