Biden debt talks get down to the hard stuff

Negotiators led by Vice President Biden are discussing taxes and entitlements in their sixth round of talks to reach a deal to raise the debt ceiling.

The six congressional negotiators are meeting with Biden in the Capitol on Thursday afternoon in talks that are expected to move from the low-hanging fruit of a possible deal to more difficult issues.

Republicans have said they will not agree to any tax increases as part of a deal, while Democrats have ruled out any cuts to Medicare or Social Security benefits.

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The sides have agreed to about $200 billion in spending cuts, but this is a tiny portion of the work necessary to reduce spending equal to a meaningful raise in the nation’s $14.3 trillion debt ceiling.

Republicans have set a goal of $2.5 trillion in spending cuts in exchange for a year-and-a-half hike to the debt ceiling of around $2.4 trillion. So far, Biden has said that believes the group could find more than $1 trillion in spending cuts.

Senate GOP Whip Jon Kyl (Ariz.) said Biden requested that the group deal Thursday with Democratic demands that tax increases be included in a deal.

Democrat demands center on raising taxes on the wealthy by allowing Bush-era tax rates on wealthier taxpayers to expire. Broader tax reform as part of a deal on the debt has been ruled out as too complex by both the administration and Republicans.

The Department of Treasury has set an Aug. 2 deadline for reading a deal to raise the debt ceiling.

The GOP focus has been on pressing for a hard spending cap that could limit future spending to 20 percent of the nation’s gross domestic product.

Biden wants the group to agree on a looser debt trigger that would mandate the debt is declining as a percentage of the economy. Under the administration’s approach the trigger could cause automatic tax increases.

Both sides are wary of the economy, which has shown signs of slowing down since the talks began. That has led to a new round of talk in Washington about the need to stimulate the economy.

“Some of the steps that we took during the lame-duck session — the payroll tax, the extension of unemployment insurance, the investment in -- or the tax breaks for business investment and plants and equipment — all those things have helped,” President Obama said Tuesday during a press conference with German Chancellor Angela Merkel. “And one of the things that I'm going to be interested in exploring with the members of both parties in Congress is how do we continue some of these policies to make sure that we get this recovery up and running in a robust way.”

Obama was referring to the December deal that extended all of the Bush tax rates. That deal also included an extension of federal unemployment benefits and a one-year reduction in the payroll tax.

House Majority Leader Eric Cantor (R-Va.), who along with Kyl is a member of the Biden negotiating group, said Thursday’s talks would also discuss entitlement reforms.

Cantor told fellow House Republicans he is “cautiously optimistic” that the talks will yield spending cuts in excess of the amount by which the debt ceiling will be raised — a goal endorsed by Speaker John Boehner (R-Ohio).

In addition to Cantor, Kyl and Biden, Sens. Max Baucus (D-Mont.) and Daniel Inouye (D-Hawaii) are participating, as are Reps. Chris Van Hollen (D-Md.) and James Clyburn (D-S.C.).