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Democrats, Republicans at impasse on debt-limit talks

Speaker John Boehner (R-OH) has laid out what he says can't be part of a debt-ceiling compromise to the president, namely tax increases.

While Boehner is asking the president to "lead," Sen. Chuck Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) held a conference call today to ask the Republicans to act like "adults." 

"As you know, the rug was pulled out from under the discussions yesterday when Leader Cantor abruptly exited the talks," Schumer said. "To paraphrase Speaker Boehner, this was not an adult moment."

Today was one of the first times Van Hollen, who has been a part of the debt-ceiling talks with Vice President Joe Biden, has laid out some of the revenue raisers that the Democrats are trying to work into a deal -- oil company subsidies and tax breaks for the rich.

"The signal they [Republicans] sent was they're prepared to put everyone's jobs at risks in order to protect tax payer subsidies for big oil companies, tax breaks for corporate jets and tax preferences for billionaires," Van Hollen said.

It has been unclear for weeks whether the Republicans involved in the talks would be willing to accept some revenue raisers along with spending cuts, to help offset raising the debt ceiling by trillions of dollars. Before pulling out of the debt-ceiling talks, asked if closing tax loopholes or eliminating certain tax credits were on the table, Cantor said, "More revenues really comes from growth in the private sector. But if you want to talk about the kind of revenues the other side seems to want to talk about, for instance, we are talking trillions in these discussions. Right? And let's just say that there is a loophole that the other side is fixated on because perhaps they don't like the parties that may enjoy some type of preference or loophole in the code, for instance oil and gas industries. You look at the value of the so called revenue savings...you have to wonder, is this about policy and substance or is this about politics?"

Reporters tried to nail Cantor down on if there are any acceptable revenue raisers, but he demurred.

It's also unclear if cutting subsidies or raising taxes on the rich are all Democrats want. And it's also not clear by how much Democrats would want to do either. A Democratic plan in 2007 would have cut $14 billion in oil subsidies over 10 years.

Van Hollen said he thought there was some hope on this issue last week, when the Senate voted to limit some of the ethanol subsidies for the purpose of deficit reduction. 

"Apparently that did not signal any move from the Republican position of protecting special-interest tax breaks," Van Hollen said. "Look, it's pretty simple, until the Republicans are more worried about reducing the deficit than they are about Grover Norquist, we've got a problem."

Norquist is the anti-tax activist from the Americans for Tax Reform. Most of the GOP -- 236 House members, 41 senators, and most of the presidential candidates -- have signed the his group's Tax Protection Pledge. The pledge states that along with opposing an increase in the income-tax rate for individuals and businesses the signer will also "oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

That is, in part, why Boehner said this: "The president and his party may want a debt-limit increase that includes tax hikes, but such a proposal cannot pass the House."

Schumer added, "What is increasingly clear is that Republicans will not have enough votes in their caucus ... to get this deal passed. They need Democrats to get a deal passed. That means a final deal will have to include some Democratic priorities."

So, what now? The president is meeting with Senate leaders next week, including Senate Minority Leader Mitch McConnell who also opposes tax increases being on the table. Both parties have clearly outlined the lines in the sand. What's unclear is how this hurdle gets cleared, before Aug. 2nd, with both parties being able to save face.