Biden, congressional group begin budget talks

[May 05, 2011]  WASHINGTON (AP) -- Vice President Joe Biden and top lawmakers are beginning their quest to tame the spiraling U.S. debt with small steps aimed at finding what common ground might exist in vastly different approaches toward restructuring government spending.

Biden and a bipartisan team of congressional negotiators were to meet Thursday at Blair House, the government guesthouse across the street from the White House.

With a deficit that could reach $1.6 trillion this year, both sides set modest expectations. But they said the meeting offers a chance to identify even small spending cuts that can build toward a broader agreement.

"There will be no announcement after that meeting that a deal has been reached, because this is a process," White House spokesman Jay Carney said.

Neither side seems to have any preconceptions that the talks would lead to a far-reaching restructuring of major benefit programs like Medicare or Medicaid or to an overhaul that makes the tax system simpler but yields more revenue.

The talks come as Congress begins to consider raising the debt ceiling above its current $14.3 trillion limit. Treasury Secretary Timothy Geithner has effectively taken some pressure off the talks by informing Congress this week that the government could continue to meet its obligations through Aug. 2.

Still, all sides -- the White House and Democrats and Republicans in Congress -- agree that spending cuts need to be approved in conjunction with must-pass legislation increasing the government's ability to borrow to pay its bills. Treasury said Wednesday that the government is borrowing an average of $125 billion a month.

The meeting will unfold with Obama enjoying a new boost in public approval following the killing of Osama bin Laden by U.S. commandos in Pakistan. But government spending and the condition of the economy were the dominant public issues before Sunday's assault on the al-Qaida leader and will return to the forefront in time.

The meeting is designed to have all sides place their plans on the table, narrow the focus to areas of common ground and begin setting up a framework for discussions. Republicans will come bearing a detailed House budget proposal that aims to cut spending by more than $5 trillion over the next decade. Biden will flesh out a broad budget proposal that President Barack Obama outlined last month that would reduce deficits by $4 trillion over 12 years.

"We staked out our position in a very definite way. They haven't," said House Majority Leader Eric Cantor of Virginia, who will represent House Republicans. "So we need to understand where they're coming from."

In addition to Biden, the administration will be represented by Geithner, White House budget director Jacob Lew and Gene Sperling, the director of the White House National Economic Council.

"We're at an important point here where Republicans and Democrats alike share, recognize the problem -- that's important," Carney said. "They share the same end goal, which is $4 trillion in deficit reduction. And they share the same general idea of what the timeline should be, 10 to 12 years."

But Obama's plan calls for about $1 trillion in higher tax revenues, a nonstarter with House Republicans. At the same time, a GOP plan to slash Medicaid and turn Medicare into a program in which future beneficiaries receive subsidies to purchase private health insurance is dead with the White House and Democrats.

Six lawmakers planned to attend: Cantor; Senate GOP Whip Jon Kyl of Arizona; Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii; Finance Committee Chairman Max Baucus, D-Mont.; and senior House Democrats Jim Clyburn of South Carolina and Chris Van Hollen of Maryland.

Some Republicans hope to attach legislation sponsored by Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., to the so-called debt limit bill. Their proposal would cap spending at about 21 percent of the size of the economy, backed up by automatic spending cuts if Congress is unable to enact legislation that brings spending in under the cap.

The White House strongly opposes the idea, saying it would force drastic, across-the-board cuts to Social Security, Medicare and Medicaid while doing nothing to force lawmakers to clean out a tax code laden with tax breaks.

"Arbitrary spending caps are nothing but a backdoor means of imposing immediate and deep cuts in Medicare and Social Security," said Kenneth Baer, spokesman for the White House budget office.

Cantor wouldn't dismiss the idea, but he said Republicans want something concrete immediately.

"All that is fine, but the history of Congress has been that anytime you put enforcement mechanisms in place like that, ultimately they're waived," he said. "We're about trying to effect real cuts, real reforms this year."

[Associated Press; By ANDREW TAYLOR and JIM KUHNHENN]

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