Republicans pull out of high-stakes deficit talks. What happens now?

President Obama and House Speaker John Boehner tried to have deputies hash out a grand compromise on deficit reduction and the debt limit. Now, they'll have to step in.

J. Scott Applewhite/AP
House majority leader Eric Cantor (R) of Virginia, pictured here in the Capitol, pulled out of bipartisan budget talks headed by Vice President Joe Biden Thursday, citing an impasse over taxes.

Republicans pulled out of deficit talks on Thursday, saying they won’t accept a Democratic demand that tax increases have to be part of any budget deal. Does this mean the high-level financial negotiating forum – led by Vice President Joe Biden – is essentially dead?

That appears to be the case. White House Press Secretary Jay Carney said Thursday afternoon that the talks are in “abeyance.”

“They may or may not resume in different forms,” he said.

What happens next? That’s unclear. But it’s long been obvious that the talks would hit a stumbling block at some point over the issue of taxes. What the GOP pullout does is clarify the positions of the two parties and kick the whole thing upstairs.

If Washington is going to strike a grand bargain that cuts future spending while simultaneously lifting the $14.3 billion limit on Treasury borrowing, it may have to be struck by the top elected officials of each party, face-to-face. That means it all now may be up to President Obama and Speaker of the House John Boehner.

“He’s in charge, I think most Americans think it’s about time he started acting like it,” said Senate minority leader Mitch McConnell (R) of Kentucky on the Senate floor, referring to Mr. Obama.

The White House did not go so far as to say that Obama and Mr. Boehner now will be the principal negotiators in the budget impasse. But administration officials did imply that Obama now will be taking a larger role in the process.

"As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders," said Mr. Biden in a statement. "The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support."

House majority leader Rep. Eric Cantor of Virginia and Sen. Jon Kyl of Arizona were the GOP lawmakers who pulled out of the secretive Biden-led budget talks. Congressman Cantor said that the talks had made progress in identifying areas of budget reduction, but that he was not willing to go along with tax hikes as part of any budget deal.

GOP leaders have been hinting about this move for days. They’ve increasingly spoken out about their opposition to taxes. At a breakfast hosted by The Christian Science Monitor on Wednesday, Senator McConnell said that as a practical matter there weren’t votes for new taxes on Capitol Hill.

“This Congress will not raise taxes. So why are we talking about it?” said McConnell.

Administration officials on Thursday reiterated that they Obama feels new taxes of some sort should be part of any plan to close the nation’s long-term deficit. Putting the US back on a road to fiscal health purely via budget cuts just is not a workable solution, they said.

“The president supports a balanced approach. He does not support an approach that provides for a $200,000 tax cut for millionaires and billionaires,” said Press Secretary Carney.

Senate majority leader Harry Reid (D) of Nevada added that from his point of view, Cantor and Senator Kyl are runaway Republican lawmakers who are “giving up” instead of negotiating a good-faith deal in which both sides will have to make concessions painful to their political base.

Indeed, some analysts suggested Thursday that inter-Republican politics was at issue in the pullout. Boehner knows that revenue enhancements of some sort almost certainly will be part of a budget deal – and he has wanted Cantor, a tea party favorite, to go along with those as cover for the rest of the GOP caucus, including Boehner himself.

But Cantor is telling Boehner that, in essence, he is on his own.

“For all the reasons that Boehner needs Cantor’s fingerprints on the deal, Cantor can’t put them there,” writes Washington Post policy blogger Ezra Klein.

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