WASHINGTON — When President Barack Obama and congressional leaders meet again today at the White House, all the elements for a big deal to reduce the nation's debt and deficits will be spread out on the table. By the end of that meeting, it should be much clearer whether there is any real possibility of that deal coming together.
What the president and House Speaker John Boehner, R-Ohio, the central actors in this drama, must decide is whether there will ever be a better time during their tenures to try to get it done — something White House officials believe is doubtful — and whether they can win enough support from their respective parties for any agreement they might reach.
For the moment, this is not a discussion about raising the debt ceiling. That is just the pretext for a broader and more fateful conversation on the likelihood of leaders from the two parties reaching an accord that has eluded Washington politicians for many years.
What's being discussed would entail the kind of political pain that has always blocked such agreements. But it also might just put the country on a sustainable fiscal path, which has been the stated goal of both sides.
A big deal
A truly big deal would reduce the deficit by $4 trillion or more over 10 years, with spending cuts in excess of $2 trillion and new revenue estimated at more than $1.3 trillion, although precise numbers are hard to come by, given the fluidity of the talks.
For Democrats, it would mean swallowing significant cuts in entitlement programs. The changes would probably affect all the major programs: Social Security, Medicare and Medicaid.
For Republicans, it would mean an end to the George W. Bush tax cuts for the wealthiest Americans, with the prospect that those high-earner income tax rates might be brought back down through a major overhaul of the tax code sometime in the next two years. (The lower tax rates for all other Americans that were enacted under Bush would become permanent.)
On the left, opposition is already building against the kinds of entitlement changes that Obama, for now, appears to be offering as his part of the bargain. Liberals are warning Obama not to assume he can command enough votes from Democrats in Congress to enact such an agreement. Senate Democrats have come up with a plan for cutting $4 trillion from projected borrowing over the next decade that includes $2 trillion in taxes, mostly on the richest Americans, and spending cuts that largely spare entitlement programs.
Boehner is under even more pressure than the president and felt the need to tell his restive troops on Friday that no deal was imminent. He has been warned by his colleagues, among them House Majority Leader Eric Cantor, R-Va., that he will have a revolt on his hands if he tries to strike this deal. Cantor has said he will not support what Boehner seems to be considering.
Virtually every Republican elected last November campaigned on a pledge not to raise tax rates. Boehner would have to try to convince his troops that ending the Bush tax cuts for the wealthy, coupled with the prospect of tax reform that could flatten the overall rate structure, is not a tax increase. On Saturday, the Wall Street Journal editorial page added to the pressure on the speaker: "Mr. Boehner shouldn't bet his majority on Mr. Obama's promises," the editorial stated.
Some Republicans may believe that Obama, who blinked late last year and extended the Bush tax cuts for the wealthy to prevent a tax increase for middle-class families that he thought would damage the economy, will do so again when those cuts come due for expiration after the 2012 election.
But the president has been firm in conveying to Republicans that the December deal marked the last time he would agree to an extension on the tax cuts for the rich. White House officials say privately that Obama is determined to veto any effort to extend them again. And he has been telling Boehner and the Republicans that they are better off making a deal now that includes major tax reform than taking their chances later.
Striking this deal would be difficult enough at any time. After Friday's pessimistic unemployment report, it becomes even harder. The anemic increase in jobs — just 18,000 overall when job cuts in federal, state and local governments are included — pushed the unemployment rate up another tick to 9.2 percent.
For the president, there may be no single greater threat to re-election prospects than the charge, now voiced with growing intensity by Republican presidential candidates, that he has failed to address the most significant problem facing the country. He has tried to tell Americans that things are improving. Friday's report sends the opposite message.
White House officials say that a major, long-term agreement to reduce the debt and deficits could provide a significant boost to the economy, both as an immediate jolt of confidence to the markets and to businesses generally and as a way to ward off longer-term concerns about the economic impact of huge deficits. But many economists argue that enacting big spending cuts and tax increases now risks slowing the economy even more.
Some Republicans believe Obama has played out these negotiations in a way that helps him politically, no matter what the outcome. According to that analysis, by putting cuts in entitlements into the discussion, the president has moved himself closer to the center and demonstrated to political independents that, above all, he is trying to bring the two parties together to solve big problems.