Deficit talks will begin anew, but expect no breakthroughs

McClatchy NewspapersMay 4, 2011 

WASHINGTON — Get ready for a lot of talk and fresh optimism Thursday about dramatically cutting the federal debt and budget deficits.

Vice President Joe Biden is scheduled to host a "budget summit" meeting Thursday morning with lawmakers from both parties and both houses of Congress.

At the Capitol, Senate Budget Committee Chairman Kent Conrad, D-N.D., is preparing to unveil his own budget plan. In addition, the "Gang of Six," three Democratic and three Republican senators, says it's close to presenting its own proposal.

Experts expect no breakthroughs Thursday, or for that matter anytime soon, since the lawmakers' most crucial deadlines are months away.

While the government is about to reach its legal debt limit of $14.3 trillion, on Monday Treasury Secretary Timothy Geithner said in a letter to House Speaker John Boehner, R-Ohio, that enough steps can be taken to keep the government financed until Aug. 2. That gives lawmakers almost three months to dicker.

After that, the next big deadline will be Sept. 30, when fiscal 2011 ends. Unless Congress passes a new budget by then — or an extension of current spending levels, as it often does — the government will run out of money the next day.

The real meaning of this new burst of negotiations and ideas, analysts said, is that at least lawmakers are starting down a path, however slowly, that could set a framework for some agreement eventually.

"This is a pregnant moment, I guess," said Robert Bixby, the executive director of the Concord Coalition, an independent budget watchdog group. "My take is that the Biden group's main function is to find a politically acceptable way to raise the debt limit.

"And that could give wiggle room to the Gang of Six," which is aiming for a grander restructuring of long-term federal spending and taxes. "The question is how much each side is willing to alienate their base," he said. "If this group can't do it, I wonder who can?"

The budget designers all seem to be in general agreement on several principles: Deficits should be cut by about $4 trillion over the next 10 years. Some sort of tax code changes must be considered, though lawmakers must take care that they're not dubbed tax increases or they'll get virtually no Republican support.

And Medicare and Medicaid, the government health programs that are huge contributors to projected deficits, are in for some trims, though probably not major overhauls, as Democrats won't stand for any drastic revamping.

The chief problem is breaking through the bitter political dialogue that reinforces an ideological stalemate. With the 2012 presidential campaign about to heat up, the rhetoric is getting more intense.

Democrats are bracing for a fight. After Senate Democrats met privately Tuesday, their first such meeting in three weeks, Majority Leader Harry Reid, D-Nev., said he'd told colleagues, "We should all be very, very careful signing on to a piece of legislation until we know what the end game is."

Battle lines were hardened last month when Republicans in the House of Representatives voted for a 10-year budget plan that would restructure Medicare and Medicaid, deeply cut domestic spending and slash top tax rates. Democrats countered with a proposal that would increase income taxes on the wealthy after 2012 while making only minimal trims in Medicare.

The outlook:

- Biden. President Barack Obama proposed the talks, but Republicans derided the idea, noting that the bipartisan National Commission on Fiscal Responsibility and Reform last year did much the same work. GOP leaders appointed only two people to the Biden panel, instead of the four they were offered.

But the Biden meeting is the only one in which members of both parties and both chambers of Congress, as well as the executive branch, will be involved. Earlier this week, Senate Republican leader Mitch McConnell, R-Ky., said he had some hope for these negotiations.

"Those talks... will in my view lead to some kind of conclusion because, as you know, the clock is ticking," he said.

White House Press Secretary Jay Carney voiced guarded optimism as well Tuesday: "This creates the potential for a bipartisan compromise ... and that's what this process, we hope, will launch on Thursday. ... There will be no announcement after that meeting that a deal has been reached, because this is a process. But you know, we expect progress to be made."

- Gang of Six. These senators have widely disparate voting records, yet they've been meeting privately for months trying to hammer out a compromise that could serve as a model for others to rally behind. They met Tuesday morning for an hour and a half, and for another hour later in the day. The six aren't talking publicly about specifics. "I'm focused on negotiating a deal," said Sen. Mike Crapo, R-Idaho. "When we get it, then we can decide how to roll it out."

- Conrad. He said he'd pattern his plan after the fiscal commission's recommendations, including an overhaul of tax laws. One difference, though: Conrad said he wouldn't tamper with Social Security. He'll present his plan to the Senate Budget Committee, probably next week, but it's unlikely to draw any Republican votes.

ON THE WEB

Deficit commission report

Geithner debt limit letter to Boehner

House vote on 2011 budget

House Republican spending cuts

President Obama's 2012 budget

Congressional Budget Office budget and economic outlook

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