Debt-Ceiling Talks Center on More Cuts, But Delayed Entitlement Reform

By , Jim Angle

Published May 05, 2011

| FOXBusiness

Republican Congressional sources and Administration officials say they are discussing a deal to raise the nation’s debt ceiling that would mainly require more spending cuts in 2012 but establish only a framework for reforming entitlements like Medicare later -- a deal around “common ground” with terms both sides can agree on.

A spokesperson for House Republican Leader Eric Cantor confirmed his comments in the Washington Post on Thursday that the debt ceiling deal is unlikely to include agreement on Medicare overhaul and that in budget talks with the White House, Republicans will focus on areas where both parties can concur, such as cutting farm subsidies and other discretionary spending.

Vice President Joe Biden is meeting with bipartisan House and Senate budget negotiators at Blair House Thursday morning, in an opening round of talks on the debt ceiling, the 2012 budget and deficit reduction. The Administration has warned Congress the Treasury Department will hit the $14.3 trillion debt cap by May 16, though it could manage certain government accounts to extend the deadline to Aug. 2.

“The necessity to put aside maximalist positions is paramount if you're trying to reach common ground and find a consensus around some achievable goals,” White House press secretary Jay Carney said Thursday. “So we welcome any efforts, indications that parties in these negotiations are searching for common ground and look forward to these talks getting underway and to having them produce a result.”

The Cantor spokesperson said Republicans remain committed to Rep. Paul Ryan’s budget reform plan, which proposes major changes in Medicare and Medicaid, and that entitlement reform remains the key to fixing the nation’s fiscal problems.

But the spokesperson confirmed Cantor’s Washington Post comment that Republicans recognize they may need to look elsewhere to achieve consensus with the Administration after President Obama “excoriated us” for a proposal to privatize Medicare starting a decade from now.

“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 $715 billion in mandatory savings,” the Cantor spokesperson said. “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."

According to sources, aside from 2012 budget cuts, Republicans are also seeking enforceable targets that would require Congress to continue to force spending down in the future under firm deficit reduction targets that starting at the end of this year. At a speech Thursday morning, Ryan repeatedly said this round of negotiations with the White House will produce a “down payment” on deficit reduction and in the end, the 2012 election “will make the decision" on entitlement reform proposals.

Ryan said he is "under no illusion that we'll get a grand slam agreement" in current budget talks with the White House. But he said we could get "a single or a double."

Rich Edson contributed to this story. 

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