Vice President Joe Biden’s bipartisan negotiators will dig into the issues that have divided them most — taxes and cuts in entitlements — as they try to determine whether they can agree on a large-scale debt- reduction plan.

The negotiators plan to meet today and at least two more times this week on a deficit-cutting plan Republicans are demanding before they will support raising the nation’s $14.3 trillion debt limit. The talks, after focusing earlier on areas of likely agreement, turn this week to revenue increases and cuts to programs such as Medicare and Medicaid, according to a congressional aide who requested anonymity.

Failure to agree on major deficit cuts would mean the White House and lawmakers might have to settle for a short-term debt-limit increase as the legislative calendar closes in, said Robert Bixby, executive director of the Arlington, Virginia- based Concord Coalition, which promotes balanced budgets. Negotiators are aiming for cuts of as much as $4 trillion to attract Republican support.

“I don’t see them getting $4 trillion in savings” for a long-term debt-reduction plan, Bixby said. “You’re probably going to see a much smaller deal, and a much smaller increase in the debt limit, like a few months or a year.”

Senate Minority Leader Mitch McConnell raised such a prospect on CBS’s “Face the Nation” on June 19.

Fallback Plan

“If we can’t do something really significant about the debt ceiling,” McConnell said, “then we’ll probably end up with a very short-term proposal over, you know, a few months and we’ll be back having the same discussion again in the fall.”

This may be a make-or-break week for the group, which is aiming for a plan by early July to allow it to be enacted before an Aug. 2 deadline. The House plans to be in recess next week and the Senate will be out of session the following week, meaning the houses won’t be back in session together until July 11.

Biden’s group of White House officials and six lawmakers — four Democrats and two Republicans — first met on May 5. The group plans to lengthen its meetings this week from two hours to three.

Negotiators including Maryland Representative Chris Van Hollen, a Democrat, said they have so far focused primarily on discretionary and non-health related mandatory programs, making little progress on taxes and entitlements.

Democrats’ Focus

The talks have focused on a long-term extension of the debt limit, Van Hollen said on MSNBC yesterday, adding that he would consider a short-term increase only if a deficit-reduction pact can’t be reached by Aug. 2.

“We have been focused on trying to get a deal that would allow us to extend the debt limit to prevent us from defaulting, through the end of next year,” Van Hollen said.

Republicans insist that spending cuts must exceed any increase in the debt ceiling. Many members of their party were elected last year on a pledge to force dramatic spending cuts.

House Budget Committee Chairman Paul Ryan of Wisconsin said yesterday that President Barack Obama wants about a $2.2 trillion increase in the debt limit, about enough to last through the next presidential election in November 2012.

“We see the debt limit as our only opportunity to get some real fiscal responsibility,” Ryan said in an interview on CNBC’s “Squawk Box.”

‘Not Our Strategy’

“Default is not our strategy,” Ryan said. “But we don’t want to see both political parties show the world and the credit markets that we just can’t do anything about spending.”

Treasury Secretary Timothy Geithner has said that, while he can make short-term transfers and take other steps to delay a breach of the debt ceiling, the U.S. will have to begin defaulting on its obligations in the first week of August unless Congress agrees to raise the limit.

Federal Reserve Chairman Ben S. Bernanke last week said the U.S. debt ceiling shouldn’t be used as a bargaining chip to force budget cuts and that failing to raise it could cause “severe disruptions” in financial markets.

Biden said last month he was aiming for a $1 trillion “down payment” on spending cuts, along with a series of longer-term benchmarks that could be enforced to reduce the debt by $4 trillion.

Republicans have insisted they won’t approve any tax increases. Still, Democrats say there is increased hope for a deal on revenue after a June 16 Senate vote in which 33 Republicans voted with Democrats in favor of eliminating a tax credit and a tariff that subsidize ethanol production.

Tax Code

Republican Senator Lindsey Graham said on NBC’s “Meet the Press” two days ago that while Republicans won’t allow an increase in tax rates, “many of us would look at flattening the tax code, do away with deductions and exemptions and take that revenue to help pay off the debt.”

His view conflicts with the stance of Americans for Tax Reform’s Grover Norquist, who insists that any elimination of tax breaks must be accompanied by an equal reduction in taxes elsewhere. Forty of 47 Republican senators have signed his no- tax-increase pledge.

Bixby said prospects for a large-scale deficit-reduction deal may hinge on the willingness of Republicans to end some tax breaks, combined with an agreement by Democrats to make some changes to Medicare.

While Democrats rule out cutting Medicare benefits, Bixby suggested they might agree to raise premiums paid by wealthier beneficiaries for some coverage, such as prescription drugs and doctors’ appointments.

“It’s not reducing Medicare, but it is charging more for the existing benefits,” he said. “We have to have some flexible thinking like that, or there won’t be a deal.”