GOP Abandons Budget Talks

(Newsroom America) -- Republican negotiators have walked away from key budget talks over the issue of taxes, throwing into question whether or not lawmakers will be able to reach an agreement to allow the government to raise its debt ceiling and continue borrowing to cover operations.

Rep. Eric Cantor of Virginia, the House's No. 2 Republican, said negotiators had found trillions of dollars in cuts but that talks had deadlocked over discussions with Democrats regarding tax increases.

Sen. Jon Kyl of Arizona also pulled out of the talks, an aide told Reuters.

"Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue," said Cantor, in a statement.

House Speaker John Boehner said Democrats would have to drop the issue of tax hikes. GOP members have said for weeks raising taxes in a weak economy is fiscally irresponsible.

"These conversations could continue if they take the tax hikes out of the conversation," Cantor said.

There was hope a deal could be struck before next week, giving political cover to lawmakers who would support raising the debt ceiling from its current level of $14.3 trillion and allow the Treasury Department to borrow more money in order to continue paying the government's bills.

Technically, the nation could default on its obligations if the ceiling isn't raised by Aug. 2. The White House has warned of dire consequences if that were to happen.

Some analysts have said a default would push the nation back into a recession and cause global markets to tank.

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