For Team Obama, A Rocky Road to a ‘Grand Bargain’
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For Team Obama, A Rocky Road to a ‘Grand Bargain’

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President Obama’s dinners and schmoozing with Senate Republicans in search of a major deal on spending, entitlements and taxes is making important headway and building much needed trust, according to one of Obama’s top economic advisers. But the road to a “Grand Bargain” is still littered with landmines, and the White House is worried that persistent strong resistance from House Republicans will make a deal impossible.

“I can’t tell you what the specific path is at this moment and I think we have to recognize that if  people, particularly in the House, are completely unwilling to compromise there’s nothing any of us can do,”  Gene Sperling, director of the president’s National Economic Council, said Thursday in a speech. “But if there is a willingness to broaden this ‘caucus of common sense’ and compromise, the president is doing everything he can to soften the ground.”

In describing the state of play of the budget talks during an appearance at a Washington conference on the plight of the middle class, Sperling noted that Obama has stuck out his neck and risked a liberal backlash  by proposing long-term cuts in Social Security and other entitlement programs and substantially more in deficit reduction in hopes of winning GOP support.

In return, he said, the Republicans must make concessions of their own – namely agreeing to corporate and individual tax reform that would raise additional revenues to help bring down the deficit. But while some Republican senators have been willing to talk about possible compromises over drinks and dinner, House Republicans are adamantly opposed to any new taxes beyond the $620 billion they approved as part of the fiscal cliff deal in early January.

Ironically, Sperling delivered his speech the day after many rebellious conservative Republicans humiliated House Majority Leader Eric Cantor, R-Va., by forcing him to withdraw a centerpiece of his “Making Life Work Agenda”– a bill to extend insurance coverage to people with pre-existing medical conditions. Since last November’s election which was a disaster for the Republicans, Cantor has been giving speeches urging his party to soften its image and exhibit  greater concern about  the everyday problems of ordinary Americans.  

Two ultra conservative groups, The Club for Growth and Heritage Action, led a contingent that urged Republican lawmakers to oppose the bill, portraying it as a costly boondoggle that would do nothing to dismantle Obama’s health care reform law.

Frequently during the last Congress, while attempting to negotiate budget agreements with Obama or push through urgent legislation,  Speaker John A. Boehner (R-Ohio) has been frustrated by similar tactics  of a couple of dozen Tea Party conservatives. . But unlike those previous battles, this one highlighted the waning strength of Cantor – once viewed as a “Young Gun” firebrand who spoke for the Tea Party, but now seemingly viewed as part of the leadership establishment. If even Cantor is having trouble controlling the rank and file, this could spell very bad news for Obama and his budget ambitions.

Obama has held two dinners with Senate Republicans, and this week hosted a bipartisan group of women senators at the White House for a third dinner. While he has drawn praise from prominent Republican senators, including Lindsey Graham of South Carolina, Orrin Hatch of Utah and Lamar Alexander of Tennessee, he appears to be getting nowhere with House Republicans.
Obama submitted a 244-page budget proposal on April 10  that largely delivered on what he promised during his re-election campaign last year. He raises taxes on millionaires, insulates Medicare from a dramatic overhaul, and keeps the national debt at a little more than 70 percent share of the economy

His blue print does not share the GOP goal of a balanced budget. After ten years, the White House proposal lowers the trajectory of a deficit that would approach $1 trillion in 2023, according to the Congressional Budget Office. Instead, the government would rack up a $439 billion deficit in 2023, with the all-important debt-to-Gross Domestic Product ratio being 73 percent.

Sperling said yesterday that while the president is willing to go the extra mile to secure a deal,  he sternly warned the Republicans not to try to use the debt ceiling as a bargaining chip when the Treasury’s nearly $17 trillion of borrowing authority expire in mid-May. A deadlock between the Republicans and the White House over extending the government’s borrowing authority nearly triggered the first government default on its debt in August 2011.

Early this year, Republicans agreed to a new spending resolution that extended the borrowing authority through the spring. But House Speaker John Boehner, R-Ohio, has renewed an earlier demand that future increases in borrowing authority be matched, dollar for dollar, with spending cuts – a demand unacceptable to the White House and many congressional Democrats.

“In terms of the debt limit, we just have to be very clear, the era of threatening default as a budget tactic is over,” Sperling said yesterday at a conference sponsored by the National Journal and the Allstate Insurance Co. “The president is not going to negotiate on that. It is the responsibility of the Congress to make sure we can pay the bills that we have already accumulated. We are very interested in having an agreement on how to reduce the bills of the future, but the era of people threatening the default of the United States as a budget tactic or to get a particular budget goal has got to end.” 

Sperling, a veteran budget policy expert with service reaching back to his years in the Clinton administration, also challenged House Republicans to come to the bargaining table with Senate Democrats to try to hammer out a compromise budget resolution. Congressional Republicans spent the past few months blasting Senate Democrats for not passing a budget for the past three years. But when Democrats cleared a proposal 50-49, the GOP began dragging its feet on appointing negotiators to meet with Senate bargainers in a conference.

Boehner said he wants budget leaders from the two chambers to first meet behind closed doors for a “pre-conference” chat to determine whether a compromise budget is feasible, before formally appointing negotiators to begin talks. “It is ‘regular order’ for the budget chairs to agree to a framework before conferees are named,” Michael Steel, a spokesman for Boehner, told The Fiscal Times this week. But Democrats and some budget experts say Republicans fear being drawn into formal budget negotiations under congressional rules that might ultimately force them to make more concessions on taxes.

“The Republicans said the most important thing was for the Senate to do a budget resolution,” Sperling said. “He [Obama] is saying very clearly we have a chance to do regular order now. This is what Republican leaders asked for. So why would we not at this point actually try to solve this in the way we teach our kids in their history and civics classes -- that you go to a conference committee. . .  And to not even try is really not reflecting even consistency with the stated position.”