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GOP shows signs of budget flexibility

Obama combative in seeking more deficit reductions

By Andrew Taylor and Jim Kuhnhenn
Associated Press / July 7, 2011

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WASHINGTON - Republicans showed signs of flexibility to break a budget impasse yesterday, but the White House raised the ante - pushing for more deficit reduction and taking a pugnacious tone casting the GOP as defenders of corporate tax giveaways.

The repositioning by both sides appeared to open new compromise possibilities a day before President Obama was set to host the bipartisan congressional leadership for new talks on the budget. The secret negotiations were gaining new urgency because they are tied to an Aug. 2 deadline to raise the government’s borrowing authority.

First, House majority leader Eric Cantor, a Virginia Republican, said he was open to closing tax loopholes that the White House says are wasteful and ineffective and that would generate some money toward reducing deficits over the long term.

Democratic officials, in turn, said Obama wants far more deficit reduction than the $2 trillion over 10 years that for weeks has been the target for budget negotiators. In April, Obama proposed deficit reduction of $4 trillion over 12 years, and White House spokesman Jay Carney said yesterday that goal remained “something to aspire to.’’

But even as White House officials expressed confidence that negotiations ultimately would succeed, Obama took a combative approach ahead of today’s meeting.

“The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars,’’ Obama said during a town hall that featured questions posed through the online social network Twitter.

The president was referring to existing tax benefits that allow corporate jets to depreciate faster than commercial jets and to tax subsidies available to energy corporations. Obama has proposed ending both as part of an effort to cut deficits with new tax revenue.

It is unclear, however, whether Congress and the administration could undertake such an overhaul in the limited time available to negotiate a deal.