Against the backdrop of a worsening economic situation, President Obama and Republican congressional leaders will meet at the White House Sunday under increasing pressure to reach an agreement that would raise the nation’s debt ceiling and cut trillions of dollars from the federal deficit. The unemployment rate inched up for the second month in a row to 9.2 percent after employers added fewer jobs in June than at any other time in the last nine months, the Department of Labor reported just days ahead of the meeting.
The report chilled stock prices Friday and renewed speculation that the U.S. economy is sputtering into a double-dip recession.
Obama pinned some of the blame for the weak job growth on Congress, saying uncertainty surrounding the federal debt ceiling and massive, looming budget cuts are scaring the markets and driving government employers to lay off workers.
Roughly 39,000 government workers lost their jobs in June, compared with 15,000 job losses in the financial sector and 9,000 job losses in construction.
“Our economy as a whole just isn’t producing nearly enough jobs for everybody who’s looking,” a subdued Obama said. “The sooner we get this [budget deal] done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit — the sooner that we give our businesses the certainty that they will need in order to make additional investments to grow and hire.”
Treasury officials expect the government to reach its $14.3 trillion debt ceiling on Aug. 2, unless Congress first reaches an agreement to increase its borrowing capacity.
Republican leaders have said they will not vote to raise the debt ceiling unless the White House and congressional Democrats agree to trim the federal deficit by as much as $4 trillion over the next 10 years. Democrats, meanwhile, are insisting that taxes on the wealthiest taxpayers be increased as part of the deal.
Obama last week laid out three proposals to reduce the deficit by between $2 trillion and $4 trillion and signaled that he was willing to accept changes to entitlement programs like Medicare and Social Security to secure a deal.
The recent jobs numbers have complicated matters, however, by fueling Democrats’ fears that sharp spending cuts would further weaken the economy.
The protracted negotiations could come to a head Sunday given that Obama said he wants lawmakers to arrive with their bottom-line proposals so the “hard bargaining” can begin.
“This weekend is vital to the prospects of achieving an agreement,” White House press secretary Jay Carney said. “That doesn’t mean that even if we are to get one, that the t’s will be crossed and the i’s will be dotted on Sunday.”
Obama has said he wants to reach a deal over the next few weeks because he fears that inching too close to the debt ceiling’s Aug. 2 deadline might touch off a global economic crisis.
But House Speaker John Boehner, R-Ohio, was far less optimistic than the White House about the possibility of settling the fight Sunday.
“It’s not like there’s some imminent deal about to happen,” Boehner said. “This is a Rubik’s Cube that we haven’t quite worked out yet.”
