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Chances fading for a sweeping deal on government spending cuts

WASHINGTON — Prospects are dimming for a grand bargain to rein in long-term budget deficits as Democrats and Republicans resist compromise on key issues ahead of the 2012 campaign, according to congressional officials and budget experts familiar with the negotiations.

That means the standoff over raising the nation's nearly $14.3 trillion debt limit may conclude this summer with a more limited round of spending cuts and promises of future reform, pushing off the tough choices about taxes and Medicare until after next year's election.

Republicans, by not compromising on taxes, can continue to campaign on the no-new-taxes stance that is a cornerstone of their political strategy, while attacking Democrats and President Barack Obama for their proposed tax hikes on the wealthy.

Democrats, whose political prospects have brightened since House Republicans proposed deep cuts in Medicare, have all but ruled out any deal that would relinquish the issue as a political weapon.

"At the end, what we're going to see is a modest-sized budget deal — a down payment," said Jim Kessler, a vice president at Third Way, a moderate Democratic think tank.

"The number will sound big — somewhere like $1 trillion or $1.5 trillion (in cuts)," he said. "But I think it'll be modest and disappointing — and disappointing to voters."

Political leaders have said that the forthcoming vote in Congress to raise the debt limit provides a pivotal moment for Obama and congressional Republicans to join together on landmark fiscal reforms, much the way the divided government crafted bipartisan deals to save Social Security in 1983 and overhaul welfare in 1996.

But achieving such a package would require both parties to yield on issues central to their ideology and re-election strategies. "The archetypal Republican wants to attack Democrats on taxes," said John Feehery, a GOP strategist. "The archetypal Democrat wants to attack Republicans on Medicare."

The nation hit its debt limit last month, and can pay its bills only through Aug. 2, when the government risks a default if borrowing cannot continue.

Chances fading for a sweeping deal on government spending cuts 06/05/11 [Last modified: Sunday, June 5, 2011 11:07pm]
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