A bipartisan group of six Senate and House lawmakers, led by Vice President Joe Biden, has found common ground on at least $200 billion in cuts by focusing on mandatory federal spending, such as agriculture subsidies, outside of politically sensitive entitlement programs like Medicare, according to people close to the negotiations.
The negotiators are moving toward a package of immediate spending cuts and deficit-cutting benchmarks -- intended to reassure U.S. investors and the bond market -- as hopes faded this week for a grand bargain sought by a separate group of six senators to reduce the nation’s debt through revisions in entitlement programs and the tax code.
“You need to walk before you run,” said Maryland Representative Chris Van Hollen, the top Democrat on the House Budget Committee and a member of Biden’s group, which reconvenes next week. “We have not engaged on the clearly politically nuclear issues yet.”
The narrower focus of the Biden talks stands in contrast to the work done by the so-called Gang of Six, led by Senators Mark Warner of Virginia and Saxby Chambliss of Georgia, that hit an impasse as they sought an agreement to reach $4 trillion in debt reduction over 10 years by trimming defense spending and entitlement-program benefits and raising revenue by closing tax loopholes.
Senator Jon Kyl of Arizona, the chamber’s second-ranking Republican and a participant in the Biden talks, told Fox News on May 15 that the items his group is focused on are “small- ball compared to the overall job that we’re going to have to do.” There is probably $2 trillion in savings “we’ve got to achieve in order to really get a handle on our out-of-control spending,” he said.
Republican Demands
The $200 billion would not satisfy Republican demands for cuts equal to any increase in the U.S. debt ceiling and are a starting point for future negotiations, according to the people involved, who declined to be identified because they aren’t authorized to discuss specifics publicly.
Biden’s group is seeking to broker a bipartisan package that could satisfy Republicans and some Democrats, such as Senator Joe Manchin of West Virginia, who are insisting on spending cuts in exchange for their votes to increase the nation’s $14.3 trillion debt limit later this year.
“The center of gravity has shifted now to Vice President Biden’s negotiations,” said Senator John Cornyn, a Texas Republican.
“The president’s at the table through the vice president’s group,” said Senate Minority Leader Mitch McConnell, a Kentucky Republican. “That’s hopefully going to lead to something that will get a presidential signature and actually have an impact on the problem.”
Smaller ‘Gang’
Senator Tom Coburn, an Oklahoma Republican, said May 17 that he is boycotting future Gang of Six meetings after clashing with Democrats over the scope of Medicare cuts. The breakdown of those talks is the second high-profile bipartisan attempt at taming the nation’s long-term debt to founder in the past several months.
In December, the leaders of the president’s bipartisan fiscal commission failed to gather enough votes to pass its $3.8 trillion plan as members from both parties opposed its mix of tax increases and spending cuts in programs such as Social Security and Medicare.
Senator Mike Crapo, an Idaho Republican and member of the Gang of Six, said it’s unlikely that his group, which has been deliberating for most of this year using the fiscal commission’s work as its model, can make progress without Coburn’s participation. “I don’t think we can move forward as a group of five,” he said.
‘Reassure the Markets’
The impasse has experts predicting that instead of the grand bargain some had hoped for, lawmakers and the White House are prepared to come together on a debt down payment, said Marc Goldwein, who was associate director of the president’s fiscal commission.
“We’re going to have to find that $4 trillion sooner or later. The question is if we do it all at once or if we do it in pieces,” said Goldwein, now policy director at the Committee for a Responsible Federal Budget, a Washington-based education and policy group focused on budget issues. “If we could get a serious down payment and some debt targets with triggers, that would do a lot to reassure the markets that we’re serious about bringing that debt under control.”
A person familiar with the Biden talks said the group has identified cuts to programs, including farm subsidies, as well as savings by adjusting premiums paid by some defined-benefit plan sponsors to the Pension Benefit Guaranty Corporation.
Still, there’s a real risk the Biden group will hit the same speed bumps as the Senate-only working group. Coburn was pushing for cuts to Medicare, the government health-care program for Americans 65 and older, that would have gone beyond what leaders of Obama’s debt-cutting commission proposed last year, according to people familiar with the talks.
Entitlement Cuts
While the Biden negotiations thus far have avoided the politically sensitive issues of Social Security and Medicare, the person said Republicans intend to push the administration for concessions on cuts to entitlement programs in future meetings.
On May 17 Cantor previewed his demands on CNBC, saying that in next week’s meetings of the Biden group, he is hoping that Van Hollen “perhaps may present an actual reform plan, something that’s been lacking.”
Despite Coburn’s departure, some members of the Gang of Six are less pessimistic about their prospects for an accord over the coming months.
Warner, the Democratic leader of the group, said before another meeting yesterday that the talks will go on because it’s “too important” to let slip an opportunity for a proposal lawmakers in both parties agree to.
“We are still at it, and we’ve made enormous progress,” he told reporters.
The group’s impasse underscores the difficult path to finding a bipartisan approach to reducing the debt, said Senator Barbara Mikulski, a Maryland Democrat.
“The debt ceiling is as hard to break as the glass ceiling,” she said.
--With assistance from Kate Andersen Brower, Laura Litvan and Kathleen Hunter in Washington. Editors: Leslie Hoffecker, Ben Richardson
To contact the reporter on this story: Heidi Przybyla in Washington at [email protected]
To contact the editor responsible for this story: Mark Silva at [email protected]
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