Pelosi: No budget deal without new revenues

House Minority Leader Nancy Pelosi (D-Calif.) said Friday that Democrats are prepared to cut favored programs like Medicare in order to rein in deficit spending — but not unless GOP leaders reverse course and accept new tax revenues.

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Appearing at the Capitol after a White House meeting on the sequester, Pelosi said President Obama and Democratic leaders have already backed plans to scale back Medicare benefits as part of budget "grand bargain" talks that never found legs in Congress. 

It's GOP leaders, she charged, who are preventing a deficit deal by drawing lines in the sand against new tax revenues.

"The House Democratic Caucus will not be an obstacle to our reaching a big, balanced, bold agreement," Pelosi said. "But you can't do it one-sided, where it just drags one side down, exalts the wealthy and the special interests.

"We want to see some movement on the other side in terms of their sacred cows," she added, "which are tax breaks for special interests."

Pelosi said Democrats are eyeing three areas of the budget for deficit reduction: cuts to domestic discretionary spending; entitlement reforms; and the elimination of tax breaks — Democrats are increasingly calling them "tax expenditures" — to oil companies and other wealthy interest groups.

She said that while some special interest tax breaks are worth keeping — like the mortgage interest deduction — others are simply "giveaways" to highly profitable industries and should be repealed. 

"That's where we have to go to the table and say, these tax expenditures are spending. They cost the taxpayer. What are we getting for them?" she said.

Pelosi may not want to hold her breath — addressing reporters after the same White House meeting, Speaker John Boehner doubled down on the Republicans' blanket opposition to new tax revenues as part of any budget deal moving forward. The Ohio Republican said the revenue debate ended when Democrats won a hike in tax rates on incomes above $400,000 as part of January's "fiscal cliff" deal. 

"Let's make it clear that the president got his tax hikes on January 1st," Boehner said. "This discussion about revenue, in my view, is over. It's about taking on the spending problem here in Washington."

Boehner also amplified the GOP's call for Obama and Senate Democrats to move legislation to prevent the sequester cuts, arguing that he already satisfied his job on that front when his conference passed two bills last year to avert the defense reductions, largely through steeper cuts to other domestic programs.

"The House shouldn't have to pass a third bill before the Senate does anything," Boehner said. "The House has laid out a plan to avoid the sequester. I would hope that the Senate would act."

The Senate on Thursday shot down two separate partisan proposals — one Democratic, one Republican — that would have averted the sequester cuts.

Complicating the debate for Pelosi and the Democrats, a number of liberals in the caucus are pushing back hard against any entitlement benefit cuts as part of future budget deals. Behind Reps. Alan Grayson (D-Fla.) and Mark Takano (D-Calif.), the liberals are vowing to oppose "any and every cut to Medicare, Medicaid, or Social Security benefits" in future negotiations with Republicans.

Pelosi on Friday insisted that most of her troops would support a grand bargain if revenues are included.

"We can persuade our caucus on a balanced, big, bold approach that has revenue, that has reform of the tax code, as well as of making judgments about entitlements as we go forward. But you cannot do it in isolation," she said. "There has to be balance in it." 

Obama also entered the fray after Friday's sequester meeting. At a White House press conference, the president conceded that the cuts are “not going to be an apocalypse.” But he also warned that they will harm the economy and urged GOP leaders to seek a balanced solution to deficit reduction that includes new revenues.

"I’m prepared to take up the problem where it exists, on entitlements, and do some things that my party may not like,” Obama said. “I am prepared to do hard things and push my Democratic friends to do hard things.

"What I can't do is ask middle-class families, ask seniors, ask students to bear the entire burden of deficit reduction when we know we've got a bunch of tax loopholes that are benefiting the well-off and the well-connected."

The sequester cuts are scheduled, officially, to begin at the end of Friday, though the effect on federal workers will likely differ by agency.