Obama focusing on debt in meeting with Democrats

[May 11, 2011]  WASHINGTON (AP) -- President Barack Obama is wading into the swirl of deficit-trimming budget plans, looking to cast himself as a broker in the struggle to tame the federal debt.

The White House and congressional Democrats and Republicans are working to sort out what debt-fighting measures they can embrace now and which ones will be left for later, probably after the 2012 presidential and congressional elections.

The president was to host Senate Democrats at the White House on Wednesday and Senate Republicans on Thursday. The meetings come as Vice President Joe Biden leads bipartisan efforts to identify some of the less politically explosive areas of the budget that could be reduced as a first installment in the effort to contain the debt.

Obama has been calling for long-term deficit reduction that blends both tax increases and changes to massive government health programs such as Medicare for older adults and Medicaid for the poor. Some Democrats are anxious for Obama to detail his proposals, worried that he might cut too deeply into venerable Democratic initiatives. Meanwhile, Republicans have proposed restructuring Medicare and Medicaid but have rejected any tax increases.

While White House officials and some top Republicans concede that major entitlement programs and tax overhauls are not in store for this year, the two issues are beginning to define the parties in time for the campaign season.

Clashes flared anew Tuesday over Democratic proposals to raise taxes or do away with some corporate tax breaks.

Senate Budget Committee Chairman Kent Conrad, D-N.D., raised the idea of an extra tax on the wealthiest taxpayers, Democratic officials said, and the Senate's Democratic leader, Harry Reid of Nevada, called for an end to tax subsidies for oil and natural gas companies. House Speaker John Boehner and Senate Republican leader Mitch McConnell both staked out seemingly unyielding positions against tax increases.

Obama, speaking at a Democratic fundraising event Tuesday evening in Austin, Texas, reiterated his call for doing away with Bush-era tax cuts for individuals who make more than $200,000.

"If we want to reduce our deficit, our sacrifice has to be shared," Obama said. "And that means even as we're making spending cuts, we also have to end the tax cuts to the wealthiest 2 percent of Americans in this country."

It's a pitch he's also likely to take to a CBS-sponsored town hall-style meeting Wednesday in Washington.

Obama is turning his focus to fiscal issues at a high point in his presidency. The U.S. killing last week of Osama bin Laden has boosted his public approval, though such support could be fleeting in the face of a slow economic recovery.

Attention to the debt and long-term deficits has taken on greater urgency because the administration has told Congress it has until Aug. 2 before the nation reaches its borrowing limit. Republicans see any vote to extend the debt ceiling as critical leverage for spending cuts.

The last increase in the debt ceiling was in February of last year, from $12.4 trillion to $14.3 trillion. Boehner this week said any further increase must be matched with equal cuts in spending.

For now, the more immediate -- and less ambitious -- work is up to the bipartisan budget negotiators who met with Biden for the second time in a week Tuesday.

Biden, emerging from a two-hour meeting with congressional negotiators across from the White House, voiced optimism about the talks but indicated that top House and Senate leaders might ultimately have to become involved to seal any bargain.

"Whether we get to the finish line with this group is another question," he said. Another round of talks is scheduled for Thursday.

One of the Republicans' top negotiators with Biden, House Majority Leader Eric Cantor of Virginia, signaled flexibility Tuesday. Cantor said the talks were designed to find where the White House, Democrats and Republicans were "in terms of commonality right now" and indicated that an agreement on spending cuts in broad terms could be enough to win support for increasing the debt ceiling.

Still, he said, "there's got to be assurances that the commitments are real" to cut spending.

White House spokesman Jay Carney acknowledged this week that there are limits to what Biden and the bipartisan group of six lawmakers can achieve.

"The reason why this hasn't been resolved in so long is because it's hard and it takes time," Carney said. "And it may be the case that all of these issues do not get resolved in these negotiations, but a number of them can. "

He added, "If there are other issues that remain unresolved, we'll deal with them when there is the environment that's conducive to dealing with them."

That could require an election first.

[Associated Press; By JIM KUHNHENN]

Associated Press writers David Espo and Andrew Taylor contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.