Don't look now, but an adult conversation has begun on the federal budget deficit.Here is the thumbnail sketch of why the environment is allegedly so ripe for these "adults" to "bargain":
Away from the shrill noise of Congress's battle over spending this year, Washington has quietly begun the most serious debate on long-term deficit-reduction in decades—the "adult conversation" that political leaders have said will be needed to address this fiscal year's forecast of a $1.65 trillion deficit and the nation's long-term fiscal woes.
Among the signs of a changing climate:Call me crazy but I'd be skeptical that the Republicans will agree to tax hikes in this environment. And getting Coburn and a couple of others won't help, although it could entice some Democrats to go out on a limb and have it chopped out from under them in 2012. (I know John Boehner "promised" they wouldn't run against Democrats on SS if they agreed to a Grand Bargain, but I'm fairly sure David Koch and Karl Rove don't feel bound by it.
• When several senators held a policy-heavy briefing on deficit reduction in the middle of an ice storm last month, more than 40 of their colleagues—almost half the Senate—showed up.
• Democrats initially wanted to freeze discretionary spending this year, but retreated almost without a fight. Debate on the remaining 2011 budget is now entirely about what, not whether, to cut.
• Cuts in entitlement programs, untouchable just months ago, are being pursued by both House Republicans and Senate Democrats, in very different ways. The recent stalemate over cuts to domestic discretionary spending in this year's budget has underscored how little can be saved in those programs, which make up only 12% of the budget
• Some of the most conservative Republicans in the Senate, such as Tom Coburn of Oklahoma, have pushed back against criticism from anti-tax activists, and remained open to revenue increases as part of a broad deficit-reduction deal.
Treasury Secretary Timothy Geithner, National Economic Council Director Gene Sperling and Sperling’s deputy, Jason Furman — leading figures in the president’s economic team — are pressing Obama to cut Social Security benefits if necessary, say sources familiar with their positions.
But Obama’s political team, led by David Axelrod, David Plouffe and Jim Messina, are urging the president to understand that backing benefit cuts could prove disastrous to his 2012 reelection hopes, sources say.
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The political team is winning the argument so far, but internal debate rages at the White House as Republicans in Congress insist sweeping efforts to restore government finances must include Social Security reform.
Geithner and his lieutenants argue that benefits reform will give the markets confidence that Obama and Congress have the will to address the problem of long-term national debt...
Geithner told the Ways and Means Committee in February that Congress must shore up the trust fund. He said the president would work with lawmakers but would not accept drastic cuts.
“We will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans’ retirement savings to the whims of the stock market,” Geithner told lawmakers.
Democrats opposing any cuts worry that Geithner left the door open to benefit reductions that are characterized as modest by centrist Democratic policy experts, such as raising the retirement age from 67 to 68 by the year 2050.
Democratic sources who have discussed reforming entitlement programs with senior White House officials say the debate continues behind the scenes.
“It’s not over,” said a centrist Democratic policy expert who has urged the administration to raise the retirement age, recalculate cost-of-living adjustments and raise the limit on income subject to payroll taxes.
“I know there are people in the administration who think Social Security should be done and some people who think it shouldn’t,” said this source. “I think the political people in general think it’s a bad idea and the economic and policy people think it’s a good idea.”
The trust fund itself has a theoretical $2.6 trillion surplus, but that money has been spent by the federal government like general revenues. The payback has arrived at a very difficult time, when Washington is running a $1.6 trillion budget deficit.