US Vice President Joe Biden was to lead a bipartisan meeting yesterday that the White House described as the first step toward a deal to cut the ballooning federal deficit and avert a catastrophic debt default, but skeptics dismissed the meeting as a political stunt.
Facing an Aug. 2 deadline to raise the country’s US$14.3 trillion debt limit or risk a US default on its obligations that could cascade through global markets, US President Barack Obama’s Democrats and their Republican opponents are struggling for a plan to shrink the deficit that many lawmakers insist on before they vote to raise the borrowing cap.
Obama wants to raise taxes on wealthier Americans and shield cherished entitlement programs like the Social Security and Medicare programs for the elderly, messages that will be central to his campaign to win re-election next year.
Republicans, playing on widespread voter anger over the bloated US budget deficit that is expected to reach US$1.4 trillion this year, want to keep taxes low and slash spending, including on the healthcare program for the elderly.
The White House has pitched Biden’s negotiations with four Democratic lawmakers and two Republicans as an opening bid from the administration to forge a compromise.
“There will be no announcement after that meeting that a deal has been reached, because this is a process. But we expect progress to be made,” White House press secretary Jay Carney said on Wednesday.
But there is skepticism on Capitol Hill that Biden’s group — Democratic senators Daniel Inouye and Max Baucus, Republican Senator Jon Kyl, House of Representatives Republican leader Eric Cantor and Democratic representatives James Clyburn and Chris Van Hollen — could craft a deal in the bitterly partisan climate leading up to the elections.
“It is extremely unlikely that those people who have been selected to participate in this are going to sit down and fairly quickly hammer out a serious deal,” said James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities.
The Washington Post reported Cantor did not think the two sides were likely to reach agreement on Medicare and other big ticket programs.
In response to the report, Cantor’s office said his starting point was the budget that Republicans passed in the House last month, which would dramatically scale back healthcare programs.
“Eric made very clear that our position is the Ryan budget which — as you know — assumes a debt limit increase and includes Medicare, Medicaid and US$715 billion in mandatory savings,” spokeswoman Laena Fallon said in a statement.
“Whether the Democrats will agree to the proposals we’ve outlined is yet to be seen, but that is our starting point so we don’t continue to kick the can down the road and make real cuts and real reforms this year,” she said.
A bipartisan group of six senior senators — the so-called Gang of Six — is separately pursuing discussions to structure a deal, although they have yet to publish a plan.