Officials familiar with the negotiations say today’s meeting began with President Obama asking House Majority Leader Eric Cantor, R-Va., to lay out what was agreed upon in the deficit reduction talks led by Vice President Biden.
Cantor outlined around $2 trillion in deficit reduction over the next decade: $1–1.1 trillion in discretionary spending; $200 billion in mandatory discretionary spending (such as civilian military retirement and farm subsidies); $200 billion in Medicare and Medicaid; and roughly $200-300 billion in saved interest on the debt.
After Cantor’s presentation, the President said the two sides might be able to reach consensus on roughly $1.7 trillion, though there were still some issues to resolve.
House Speaker John Boehner, R-Ohio, has said the amount they agree to in deficit reduction needs to be equal to – if not more than – the amount they agree to raise the debt ceiling.
How much is that? There seemed to be consensus in the room that the amount by which they need to raise the debt ceiling is $2.4 trillion.
That would get the government to February or March 2013. Why that date? No one thinks a lame duck Congress should take this on from November-January 2012/2013 and that would allow the new Congress and maybe a new President to get his or her sea legs before addressing this again.
So tomorrow’s homework assignment, the president said, is for the congressional leaders to figure out how to get from $1.7 trillion to $2.4 trillion. Not that the president accepts Boehner's ultimatum that deficit reduction equal the amount they raise the debt ceiling. The point was everyone needs to come with a proposal on how to arrive at a bill that can pass.
Republicans are still insisting on no new taxes. Democrats say they need some revenues – a “balanced approach” – to get Democratic votes. As House Minority WHIP Steny Hoyer, D-Maryland, said today, “Republicans must be prepared to make concessions of their own and not put the entire burden on seniors, the middle class and the most vulnerable among us." Hoyer told Cantor "you won't get one Democratic vote" for his cuts-only proposal.
Congressional leaders will need Democratic votes not only in the Senate but the House as well. “You’ve got the (Michele) Bachmann Caucus that has made it clear they won’t vote for anything,” one Democratic official said.
Boehner said at one point that “it’s clear to all of us how big this spending problem is. Congress keeps voting for programs we can’t pay for. But look, entitlement cuts aren’t easy for us to vote for either. Our guys aren’t cheerleading about cutting entitlements.”
“Your guys already voted for them,” the president said, referring to the budget offered by House Budget Committee Chairman Paul Ryan, R-Wisc.
“Excuse us for trying to lead,” Boehner said.
The president today continued to make the case for a big deal, arguing that if they’re going to draw heat for the deal, they should at least do more than make a down payment on the deficit – they should get the country on sounder financial footing and begin to seriously bend the deficit cost curve.
During another exchange, Republicans were going through proposed tax increases as bad for jobs specifically, having hedge fund managers pay the same tax rate as average Americans (they currently pay a 15% rate) and capping the amount wealthier Americans can deduct at 28%.
"C’mon, man!” Vice President Biden exclaimed, “let’s get real!"
The Vice President argued that their opposition isn't economic, it's ideological, that no real economist thinks they're "job killers."
In terms of the big deal President Obama and Speaker Boehner discussed in the past – for around $4 trillion in deficit reduction –, Democrats say the Republicans walked away from major spending cuts, entitlement reform, and tax reform, all because part of the trigger mechanism if the tax reform was not achieved by the end of 2012 was the risk that the Bush tax cuts on the wealthiest Americans would have expired. Democrats insisted that one commitment for tax reform needed to be that the new code needed to be “at least as progressive” as the current tax code.
“Ronald Reagan would have accepted this plan,” one of the Democratic officials said.
The meeting broke after about an hour and a half.
“We’ll meet tomorrow at the White House at 3:45,” the president said.
“A.M. or P.M.?” Senate Majority Leader Harry Reid, D-Nev., joked.
“It may come to that,” the president said.