4:00am

Fri April 29, 2011
Politics

Debt Crisis Hangs Over Washington Politics

Vice President Joe Biden will begin negotiations next week with House and Senate leaders on a deficit reduction plan that the White House hopes will persuade Congress to raise the ceiling on the federal debt.

If the debt limit isn't raised by early July, the U.S. will default for the first time in history on its financial obligations — an event that could be catastrophic.

Pressure From The Right

Raising the debt ceiling is a tough vote. Big majorities of Americans — Democrats, Republicans and independents — are against it. And no group feels more strongly about this than the Tea Party, whose anger about the debt and spending propelled the Republicans to their new majority in the House.

Yesterday in Canton, Ga., a group of about 40 Tea Party patriots led by Jenny Beth Martin gathered outside the district office of Republican Rep. Tom Price. They're disappointed that the last deal Congress negotiated with the White House — to fund the government for the rest of this year — didn't cut enough.

"Tom knows full well that that bill didn't have $10 billion in cuts — it had $352 million, and he still voted yes," Martin said. "We're all tired of it, and we expect more. And now we've got the debt ceiling increase coming up. It's time to cut America's credit card."

So now, Republicans are under even more pressure to get a debt ceiling deal that makes deep cuts in spending. Speaking on CNBC, House Majority Leader Eric Cantor (R-VA) laid down his demands.

"Together with that debt limit vote has to be some real reforms," he said, "and I mean real — not the typical Washington, kick-the-can-down-the-road stuff, but real things that can produce savings."

That real reform may end up being some kind of spending or deficit reduction goal, coupled with an enforcement mechanism — a trigger for automatic cuts if Congress fails to reach the goal.

But neither side enters these negotiations knowing exactly what the other side will agree to.

"The goal is going to be to seek balanced deficit reduction that has shared sacrifice and allows us to find common ground on those things we agree on, even amidst our fundamental disagreements," says Gene Sperling, head of the White House National Economic Council.

"I can't prejudge for you what the exact components of that common ground will be days before the vice president's first meeting, but I think that has to be the goal," he says.

Give And Take

They only have about two months to figure this out, and right now, the two sides seem very far apart on basic issues such as what kind of cuts the enforcement mechanism should trigger.

Republicans say taxes — even special interest tax loopholes — should be off the table. Democrats don't want big changes in entitlement programs.

Former Clinton White House aide Bill Galston thinks it would help to bridge the partisan divide if the discussions were broadened to include tax reform — that is, lowering individual income tax rates by getting rid of tax loopholes.

"A lot will depend on how serious the Republicans are about the kind of tax reform that would actually raise some money," he says. "And on the other side, a lot depends on whether there's any give in the president's declared position that all of this needs to be done within the framework of the unaltered current structure of the Medicare program."

What could get Republicans to move on taxes and Democrats to move on entitlements? Many people in Washington, including Democratic strategist Geoff Garin, are pinning their hopes on the Gang of Six — three Republicans and three Democrats in the Senate who've been meeting for months trying to come up with a way to legislate the recommendations of the president's deficit commission — including tax reform and Medicare adjustments.

"If they can come to some kind of agreement, that will carry a lot of weight because it's bipartisan," Garin says. "Even that process is very controversial among Republicans in the House of Representatives, so it's not clear that they'll be able to carry the day. But it does seem pretty clear that the path to meeting in the middle is going to run through the Gang of Six."

But if the Gang of Six is to ride to the rescue with a solution to the partisan standoff, they first have to come to an agreement themselves. The six senators are hoping to release something next week, around the same time as the debt ceiling negotiations begin. But they're not there yet. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.