Republicans emerge from Obama dinner with new hopes for deficit deal

Senate Republicans are more optimistic about the prospect of a grand bargain on the deficit after an intimate dinner with President Obama Wednesday evening in downtown Washington.

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Obama and a dozen Republicans discussed a range of issues during a nearly two-hour meal at the Jefferson Hotel, focusing mostly on the budget, the issue that most divided them in the last Congress.

GOP senators say no new policy ground was broken as both sides held fast to their battle-tested positions on taxes and spending, but the meeting helped thaw frosty relations and improve the prospects of a deal eventually.

“I think really what he is trying to do is start a discussion and kind of break the ice and that was appreciated,” said Sen. Mike Johanns (Neb.), one of twelve Republicans who broke bread with Obama. “Most of the meeting was spent on budget and [finding] a way forward. His goal is ours. We want to stop careening from crisis to crisis.”

Johanns said he is more optimistic of reaching a broad deficit-reduction deal this Congress.

“I think he’s very sincere. I think he wants to try to figure something out. Today was a good step and we’ll see what happens now,” he said.

Obama and his Republican guests ordered a variety of items off the haute-cuisine menu of the hotel’s restaurant, Plume, which features foie gras terrrine and lobster Thermidor.

Obama had a good time, despite his sometimes bitter policy differences with Republicans.

“The president greatly enjoyed the dinner and had a good exchange of ideas with the senators,” said a senior administration official.

The White House announced the president picked up the tab and paid for it out of his own pocket.

Sens. Kelly Ayotte (N.H.), Richard Burr (N.C.), Saxby Chambliss (Ga.), Dan Coats (Ind.), Tom Coburn (Okla.), Bob Corker (Tenn.), Lindsey Graham (S.C.), John Hoeven (N.D.), Ron Johnson (Wis.), John McCain (Ariz.) and Pat Toomey (Pa.) also sat down with Obama.

Hoeven said the group discussed ways to address $85 billion in automatic spending cuts known as sequestration, the budget, and pro-growth tax reform.

“We really did talk about a big deal that includes entitlement reform in a way that protects and preserves Social Security and Medicare but addresses the debt and the deficit,” he said. “What we really talked about is, ‘How do you get there?’ ”

The president and lawmakers are encouraged that Republican and Democratic leaders in Congress are moving together on legislation to avert a government shutdown at the end of March. The government-funding bill could be used to manage sequestration to soften its impact on government services.

They see upcoming Senate and House debates on budget resolutions and the expiration of the national debt ceiling in May as other opportunities for leaders to come together to discuss a broad deficit-reduction deal.

“That’s what we talked about today is how do we come together in a bipartisan way on this to truly address the debt and the deficit in this next four-month timeframe,” Hoeven said.

Obama reiterated his longstanding demand that Republicans agree to raise taxes as part of any agreement to reform entitlement programs.

Republicans agreed that a deficit deal should increase federal revenues, but argued those should come from economic growth as a result of streamlining the tax code, not from higher net levels of taxation.

Corker said the discussion focused on "a way forward on the fiscal issues."

"We talked about a lot of issues, but really it was just a constructive conversation about a way of moving ahead and solving our nation's fiscal issues in general," Corker said. "It was not a negotiation, if you will —although lots of issues were discussed."

Corker said the focus was more on reaching a grand bargain than simply turning off sequestration.

"It wasn't on that. It was on dealing with the big issue of solving our fiscal problem and it was a constructive meeting," Corker said. "It was a very positive meeting, it really was."

He described the meeting as congenial, despite the weeks of pounding Republicans have taken from Obama, who toured the country as part of a campaign to pressure Republicans to halt sequestration, which took effect last week.

"I think meetings like this are helpful and I think they build relationships," Corker added. “It was as social a meeting as you would find anywhere."

Toomey characterized the evening as “very cordial” and “constructive."

--This report was updated at 10:10 p.m.