Medicare Cuts Could Help GOP Save Face in Debt Talks

As Obama pushes the deadline for a deal up to July 19

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Though August 2 is the date the Treasury Department actually runs out of money, President Obama keeps moving up the debt ceiling negotiation deadline. Last week the White House said the real deadline is July 22, to give Congress enough time to pass the legislation. Then in a statement Tuesday, Obama said he wanted a deal in "two weeks"--setting the date at July 19--to avoid freaking out the markets. "This should not come down to the last second," Obama said. House Speaker john Boehner responded that the deal Obama wants "cannot pass the House." Behind the scenes, top aides are trying to put together legislation that can.

The New York Times' Mark Landler and Carl Hulse report that Obama had a secret meeting with House Speaker John Boehner at the White House Sunday, which "suggests that the talks are entering a critical phase."  The main dispute remains over whether to include measures to raise tax revenue in addition to cutting spending--Republicans want zero tax increases. Obama's offer to whittle down spending on Medicare and Medicaid is "likely to unsettle many Democrats," the Times reports. But cuts to those programs could be what saves the negotiations. Politico's David Rogers reports that "House Republicans have dug a political hole for themselves on the debt issue and their own controversial budget plan to dramatically reshape Medicare." But there is a way to climb out of that hole, Rogers explains:

A deal now that includes substantial Medicare savings--and thereby diffuses that political issue in 2012--could be a real asset for Boehner. Democrats have put options on the table representing close to $500 billion in 10-year savings from Medicare and Medicaid. This could be dialed up or down depending on Republican willingness to agree to more revenues, and by being so aggressive for "something big," Obama is trying to make the GOP look small if it walks away.

But Kent Conrad, the Democratic Senate budget committee chair, will offer a budget plan that might ask for something too big. The Hill's Alexander Bolton reports that Conrad will offer a proposal that cuts the deficit through a 50-50 split on tax increases and spending cuts. In April, Obama called for a three-to-one ratio of cuts to tax hikes; further, the proposal could put moderate Democrats up for reelection next year in a difficult position, Bolton writes.

This article is from the archive of our partner The Wire.