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July 11, 2011 – 10:24 p.m.

Democratic Leaders Wary of President's Bargaining Stance

By Joseph J. Schatz, CQ Staff

President Obama’s efforts to stake out the political middle ground in debt limit talks are drawing behind-the-scenes warnings from Democratic leaders, whose support will be critical to passing a deal.

With just a few weeks before the nation defaults on its financial obligations, Obama must weigh the viability of a deficit reduction package including more than $1.7 trillion in spending cuts. From the right, the president still faces pressure to keep taxes out of the deal; from the left, restive lawmakers increasingly push for new revenue and decry plans to pare entitlements.

Based on earlier negotiations led by Vice President Joseph R. Biden Jr., the cuts being considered would trim more than $1.1 trillion from discretionary spending and hundreds of billions of dollars from Medicare and Medicaid.

But heading into a third straight day of talks between Obama and congressional leaders at the White House, Democratic leaders in both chambers are warning Obama that such a package risks losing support from their caucuses.

Late Monday, a House Democratic leadership aide said party leaders are telling the White House that members of their caucus will not vote for a deal consisting entirely of spending cuts, without any revenue increases.

And according to another source familiar with the talks, Senate Majority Leader Harry Reid, D-Nev., said at the Monday meeting that the $1.7 trillion package of cuts, with its entitlement reductions, would not be able to pass the Senate.

Another problem for debt negotiators: The cuts under consideration might not be large enough to cover the cost of a longer-term debt limit increase.

House Republican leaders are demanding that any increase in the $14.3 trillion debt ceiling be matched or exceeded by accompanying spending cuts. The $1.7 trillion package of cuts could fall short of the $2.4 trillion increase in the debt limit necessary to carry the government through the coming election — a key White House goal.

Yet they would come close. And even as Obama publicly pushes Republicans to accept new revenue as a price for entitlement cuts, he also has made it clear that he is willing to go to the right of some congressional Democrats when it comes to reducing entitlement spending.

“The vast majority of Democrats on Capitol Hill would prefer not to do anything on entitlements,” Obama said in a White House press conference Monday. “If you look at the numbers and Medicare in particular we’ll run out of money, and we will not be able to sustain that program.”

Democratic votes will be critical to passing a deficit reduction package in both chambers; even in the Republican House, Democratic votes will be necessary to offset the expected opposition of many conservatives to any debt limit increase. Still, Obama may end up breaking with many of his Democratic allies in the interest of securing a deficit reduction deal heading into his 2012 re-election bid.

Attention has shifted back to the substance of the earlier Biden discussions after House Speaker John A. Boehner, R-Ohio, said July 9 that a larger, $4 trillion deficit reduction package would not work because of House GOP resistance to revenue increases.

While Senate GOP leaders have floated the idea of a short-term debt limit increase to buy time for a larger deal, Obama dismissed that idea Monday, saying he would not sign a 30-, 60- or 90-day debt limit increase.

Democratic Leaders Wary of President's Bargaining Stance

“That is just not an acceptable approach,” Obama said. As the 2012 election approaches, “it’s not going to get easier, it’s going to get harder. We might as well do it now. Pull off the Band-Aid. Eat our peas.”

Pulling From Biden Plan

Any final deal is likely to center on three main areas that were the focus of Biden’s group in May and June: cuts in farm subsidies and other non-health mandatory programs, caps on discretionary spending and more-modest reductions in mandatory health spending.

While the cuts discussed by the Biden group were never agreed to by both parties before those talks ended last month, House Majority Leader Eric Cantor, R-Va., pushed the package of proposals in a Monday meeting at the White House, sources said.

Earlier Monday, Cantor said that the Biden group had looked at cutting discretionary spending by $1.1 trillion, mandatory health care programs by $350 billion and mandatory non-health programs by $300 billion.

During the White House meeting, Cantor laid out the “world of savings” identified by the Biden group, including potential Medicare cuts discussed by the group, a GOP aide said.

A Democratic source said that Cantor and Senate Minority Whip Jon Kyl, an Arizona Republican, talked about $250 billion in cuts to Medicare. The source indicated the Monday meeting was not very productive, noting that Obama said the Cantor and Kyl proposal did not produce enough overall savings and also did not include revenue increases.

Questions Over Numbers

There are disputes over exactly how much potential savings the Biden group had identified.

Cantor has pegged the total savings identified by the Biden group at more than $2 trillion. Obama, however, said during the meeting that he estimates the cuts identified by the group would save about $1.8 trillion, the GOP aide said.

Rep. Chris Van Hollen of Maryland, the top Budget Committee Democrat, said earlier Monday that Cantor’s account overstated the size of the agreement in those talks. Van Hollen said in an interview on MSNBC that there had been a bipartisan accord on only $1.1 trillion in cuts overall.

In sum, there appears to no bipartisan agreement on how to get much beyond $1 trillion in cuts, much less get to the estimated $2.4 trillion needed to satisfy the government’s borrowing needs through 2012. And while dismissing the idea of a short-term deal lasting six months or less, Obama left his options open.

Lawmakers are “going to resolve this and going to resolve this for a reasonable period of time,” Obama said.

Democratic Leaders Wary of President's Bargaining Stance

Paul M. Krawzak and Brian Friel contributed to this story.

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