Partisan rhetoric may shrink deficit aspirations

[July 09, 2011]  WASHINGTON (AP) -- President Barack Obama on Saturday urged both Democrats and Republicans to "make some political sacrifices" and take advantage of an extraordinary opportunity to tackle the government's budget crisis.

Obama said in his weekly radio and Internet address that it'll take a "balanced approach" that mixes limits on domestic programs and the Pentagon, curbs to Medicare and eliminating some tax breaks for the wealthy.

Obama spoke a day before hosting top lawmakers in both parties for a negotiating session at the White House.

Even as the negotiators seek a grand deal to bring the deficit under control, however, both Obama's Democratic allies and GOP rivals seem to find their options limited by months of angry rhetoric and political posturing.

Faced with sharp divisions over increasing taxes and cutting public benefit programs, hopes of reaching agreement on an ambitious plan to cut spiraling deficits by $4 trillion or more over the coming decade have diminished since a friendly, earnest meeting at the White House on Thursday. Officials now say a smaller, $2 trillion agreement, appeared more doable.

"The good news is, we agree on some of the big things," Obama said. "We agree that after a decade of racking up deficits and debt, we finally need to get our fiscal house in order. We agree that to do that, both sides are going to have to step outside their comfort zones and make some political sacrifices."

On Friday, Obama's most important negotiating partner, House Speaker John Boehner, R-Ohio, said that the two sides remained far apart.

"It's not like there's some imminent deal about to happen," said Boehner. "There are serious disagreements about how to deal with this very serious problem."

Obama cited a bleak jobs report Friday in hopes of prodding Congress toward a swift agreement on deficits and the national debt. But the higher unemployment numbers hardened the views of partisan lawmakers who think a weak economy can't tolerate added taxes or cuts in spending, key components for the sweeping kind deal that Obama seeks.

White House and congressional negotiators and their aides continued to work on deficit-cutting ideas to add to a set of proposals tentatively agreed to in talks led by Vice President Joe Biden in May and June. The earlier proposals would shave $2 trillion or so off the deficit. Obama has asked the top eight leaders of Congress to come to the White House Sunday to assess progress in the talks.

A budget agreement is central to increasing the nation's borrowing limit, currently capped at $14.3 trillion, by Aug. 2. If that deadline is not met, there could be a potentially catastrophic government default on obligations to bondholders, government contractors and people relying on Social Security and other government programs. That looming deadline and a new unemployment rate of 9.2 percent heightened the pressure for a deal, uniting the two most high-profile challenges facing Obama's presidency.

Obama urged Congress to move quickly to raise the debt ceiling, saying the uncertainty over a potential default has hindered hiring in the private sector.

"The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that they will need in order to make additional investments to grow and hire," Obama said Friday from the White House Rose Garden.

Obama later made his case privately to House Democratic leader Nancy Pelosi during a half-hour meeting at the White House.

Both parties and private economists agree that if Washington does not raise the debt ceiling by early August, the economy will be deeply shaken and perhaps slip back into recession.

The White House and Congress are seeking common ground on a budget deal that would trim 10-year deficits by as much as $4 trillion. Obama has urged lawmakers to strive for that number, but some officials on Friday said they believed that a smaller, $2 trillion deal appeared more realistic.

The larger package would require new tax revenues -- with hundreds of billions of dollars flowing into federal coffers from a future overhaul of the loophole-laden tax code -- and significant spending reductions in large government benefit programs, such as Medicare, Medicaid and Social Security.

But liberal Democrats whose votes will be needed to balance GOP defections and get a deal passed recoiled over the possibility that Obama would endorse cuts to Medicare or Social Security. The administration and lawmakers are eyeing, for example, less generous adjustments for inflation, a move that would reduce future Social Security payments.

"I'm a Democrat. I got elected to Congress to protect Social Security and Medicare, not dismantle them," said Rep. Jim McGovern, D-Mass. "Yes, we do need entitlement reform, but we need to do this thoughtfully, not come to a deal in a weekend."

Republicans, meanwhile, played down media reports suggesting that Boehner was willing to entertain the possibility of higher tax revenues as part of a "grand bargain" that included cuts to benefit programs like Social Security and Medicare.

"Conservatives are just not going to vote for a tax increase on this economy," Rep. Trent Franks, R-Ariz., said, reflecting a common view among his GOP colleagues. "It's just not going to happen."

The jobless numbers only cemented that view, as Republicans argued that increasing taxes would be ill-timed during an economic slowdown.

"The revenue idea was trumped up by the president and latched onto by the press," said Rep. Tom Price, R-Ga. "There isn't anything to the fanciful notion by this president that we'll go along with his desire to increase taxes on the American people."

At the same time, Democrats argued that a weak economy is not the time to consider trimming government spending.

"It's pretty clear that in this time of economic distress, attacks on Social Security and on Medicare are really wrong for the country," said Sen. Sheldon Whitehouse, D-R.I.

On health care, negotiators have been closing in on cuts of about $200 billion over 10 years, about equally divided between Medicare and Medicaid, with most of the burden falling on individual industries such as hospitals, drug manufacturers and nursing homes.

One Social Security proposal on the negotiating table would lower annual cost-of-living increases, reducing the retirement benefits for older Americans over the long term.

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Online:

Obama address: http://www.whitehouse.gov/ 

GOP address:
http://www.youtube.com/RepublicanConference

[Associated Press; By ANDREW TAYLOR]

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