Obama and Congress make opening bids on budget fix

Lesley Clark,David Lightman

President Barack Obama and congressional leaders were optimistic Friday after opening talks aimed at avoiding a tumble over the “fiscal cliff,” offering hints of a compromise that would combine new tax revenue with steep spending cuts.

Their hourlong meeting at the White House kicked off what’s likely to be an intense, unpredictable November and December as Congress and the White House grapple with how to deal with Bush-era tax cuts that expire at the end of next month and $109 billion in across-the-board spending reductions due to take effect Jan. 2.

Obama said after Friday’s meeting that they’d agreed to work together to find a solution that “includes both revenues and cuts in spending.” The challenge, he said, was to cooperate, “work together, find some common ground, make some tough compromises.”

House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., who’ve been loath to consider tax increases as part of a solution to tame the deficit, said after the closed-door meeting that Republicans might consider taxes if they were accompanied by significant spending reductions.

“We are prepared to put revenue on the table, provided we fix the real problem,” McConnell said, adding that most of his caucus thinks that “we’re in the dilemma we’re in not because we taxed too little, but because we spent too much.”

Back at the Capitol, the mood among Congress’ rank and file was largely conciliatory. But there was a sharp reminder that getting a deal through the lame-duck session faces a struggle with each party’s ideological wing, where some members dug in Friday.

“This was a photo op for the president. So be it,” said Rep. Tom Price, R-Ga., a leading conservative.

Among liberal Democrats, Rep. Jim McGovern of Massachusetts warned that “it would be foolish to just assume we’re to go along with everything. We’re not a cheap date.”

Liberals are thought to control as many as 90 Democratic seats in the House of Representatives, while staunch conservatives usually can count on about the same number on the Republican side. Each bloc has firm ideas of what it wants.

Conservatives insist that tax rates remain the same or go lower.

“We got a loud and clear message from the voters,” said Rep. Steve Scalise of Louisiana, the incoming chairman of the Republican Study Committee, the House’s conservative caucus. “The president only defines revenue as raising taxes. We see revenue coming from getting the economy moving again.”

Boehner was more circumspect, saying that Republicans put revenue on the table to demonstrate their seriousness about a solution. Boehner told Obama that without significant tax and entitlement changes, lawmakers will be unable to control the burgeoning budget deficit.

The speaker suggested that tax and entitlement issues may be too complex to solve in a lame-duck session. Negotiators should settle on long-term revenue targets for tax revisions, he proposed, as well as goals for savings from entitlement programs, such as Medicare.

Liberals said they were wary of big spending cuts, particularly those that hurt the poor or significantly cut Medicare.

Both sides in the talks have been open to raising the eligibility age for most Medicare recipients from 65 to 67, but Rep. Peter Welch, D-Vt., cautioned that “This is where the talks are going to get very difficult. There’s going to be a desire to shift the burden to beneficiaries.” The nonpartisan Congressional Budget Office has said that raising the eligibility age would save about $148 billion over 10 years.

Obama and lawmakers agreed that staffers would begin working on a framework that would be presented to the White House and lawmakers after the Thanksgiving holiday. The president leaves Saturday on a four-day trip to Asia.

Pelosi said at the Capitol that she’d hope to get $4 trillion in cuts from projected deficits over 10 years, the same amount Obama sought during last year’s debt ceiling talks.

While the White House talks proceeded Friday morning, about 20 House members – half of them Democrats, half Republicans – met to talk about bipartisan solutions. They were urging colleagues to agree on a broader solution for reducing the deficit.

"This fits in hugely with the White House and congressional talks in trying to find a response large enough and a long-term solution – as opposed to some quick fix that is full of gimmicks – that involves spending cuts, entitlement reform and revenue as well," said Rep. Jo Ann Emerson, R-Mo.

Obama also met Friday afternoon with advocates for the elderly, Hispanics and African-Americans, who said they’d lobby lawmakers to support his call for higher taxes on higher incomes.

Currently, the top income-tax rates are 33 and 35 percent, but they’re slated to rise to 36 and 39.6 percent next year. The president wants to keep the lower Bush-era rates for individuals who make less than $200,000 a year and families earning less than $250,000, while raising the top rates for others. He’s signaled this week that those rates need not fully revert to pre-Bush levels.

Lawmakers – perhaps chastened by the results of last year’s debt crisis, when one credit rating agency downgraded the U.S. – sought to bolster confidence that there won’t be a repeat.

“We’re both going to have to give up some of the things that we know are a problem,” said Senate Majority Leader Harry Reid, D-Nev. “There is no more ‘Let’s do it some other time.’ We’re going to do it now.”

By Lesley Clark and David Lightman
McClatchy Newspapers