LINDA WERTHEIMER, host: This is WEEKEND EDITION from NPR News. I'm Linda Wertheimer.
After weeks of fruitless talks, House Speaker John Boehner appears to have thrown in the towel in the contentious fight over the federal deficit and the nation's debt limit. Mr. Boehner said last night he would back down from Republican demands for $4 trillion in cuts to reduce the nation's deficit in exchange for raising the debt ceiling.
Instead he'll urge negotiators to aim for a smaller package of 2 to $3 trillion in spending cuts. Mr. Boehner will be among congressional leaders who will meet with President Obama later today at the White House. As the negotiations resume, NPR's Mara Liasson joins us with more on this major development in the debt and deficit battle. Good morning, Mara.
MARA LIASSON: Good morning, Linda.
WERTHEIMER: So, what or who changed John Boehner's mind?
LIASSON: His own Republicans in Congress changed his mind. He couldn't sell this deal. This was a big, bold, ambitious deficit reduction package that he and the president decided to push. It would involve everybody giving something. The Republicans would have to agree to raise some tax revenue, not necessarily raise tax rates on people, but raise revenue.
The president was going to agree to significant entitlement cuts. But he simply couldn't sell this. Apparently, what happened was when the staff negotiators got to the nitty-gritty of this, what to do with the Bush tax cuts for the top earners while the two sides are working on this big tax reform piece of this, which means lowering rates for everybody, bringing income tax rates and corporate tax rates down while you do away with tax deductions, tax breaks, tax loopholes, what do you do in the interim and how do you force a future Congress to actually do this? They couldn't figure that out. So Boehner essentially threw in the towel and now they're back to the drawing board.
WERTHEIMER: So, does this mean the impasse breaks before the August 2nd debt ceiling deadline?
LIASSON: Well, we don't know. I mean, one of the reasons that the big deal was floated first by John Boehner and also by Barack Obama, was that the medium-size deal to raise the debt ceiling, the $2.5 trillion deal was proving so hard to reach. And sometimes if a problem is hard to solve, you make it bigger. So he came up with this idea with the president, let's make it bigger - do more deficit reduction and give both sides some of the big things they want - real reforms in entitlements and tax reform and more revenue. But that proved to be a bridge too far.
WERTHEIMER: So what's the political fallout here?
LIASSON: Well, that's hard to figure. In the short term, I think it's a loss for John Boehner. He couldn't get his own conference to go with him. His majority leader, Eric Cantor, said all along we can't get the votes for this. It looks like he was a better vote counter. Republicans do get to say to their base, we kept our hard line on tax increases.
For the White House I think the president gets to say to the American people, I was willing to compromise. I was willing to bridge differences. Democrats can say we were willing to make compromises on Medicare. We weren't happy about them, but it's Republicans who walked out because they wanted to protect tax breaks for the rich.
I would say, however, in all of this political fallout, the American people are the biggest losers. What an opportunity. This would've been a way to do real, long-term serious deficit reduction and now both sides have kicked the can down the road again.
WERTHEIMER: So, what happens next?
LIASSON: The meeting tonight goes on. Negotiations continue. And, meanwhile, the clock is ticking, because on August 2nd, the government is going to default on its debt. I think one thing that we're waiting for now is how will markets react to this?
WERTHEIMER: NPR's national political correspondent Mara Liasson. Mara, thanks.
LIASSON: Thank you, Linda.