Maybe There Won't Be a Manufactured Fiscal Crisis This Fall

Though several Republicans have been threatening a big showdown over the debt limit and government funding with President Obama this fall, it's possible that maybe we won't approach total fiscal calamity this time.

Though several Republicans have been threatening a big showdown over the debt limit and government funding with President Obama this fall, it's possible that maybe we won't approach total fiscal calamity this time. In an interview with The National Review's Robert Costa, Senate Minority Leader Mitch McConnell sounds tough, but outlines what could be the outlines of a deal. And top Obama aides have been meeting with eight Senate Republicans to figure out a compromise on these issues, The Wall Street Journal's Peter Nicholas and Kristina Peterson report. But there probably won't be a longer-term "grand bargain."

And McConnell, who is up for reelection in 2014 and facing a conservative challenger in the Republican primary, says lots of aggressive-sounding things that might play well with conservative voters. He even makes a gay joke about Sens. John McCain and Chuck Schumer, who worked together on immigration: "You know, I was kidding [New York Democrat Chuck Schumer] and McCain the other day, and asked, 'When are you all getting married? It's getting almost embarrassing.'"

McConnell warns Democrats, "The tax issue is over." But he suggests Republicans are open to preventing a second year of the sequester. "You want sequester relief? Then let’s talk about a reduction in entitlement spending," he says. "I think a place to talk is on things like chained CPI." Obama has already said he'd support chained CPI, which is a less generous way of calculating the cost-of-living adjustments to Social Security benefits. McConnell also floats raising the age of eligibility for Medicare, which Democrats do not like. McConnell says, "In return for that, we could trade less spending reduction on the discretionary side, because we all know the biggest challenge is actually not on the discretionary side, but on entitlements. To me, that’s a better place to go in the fall than signaling that you’re open to raising taxes."

There are still big sticking points. A dozen Republican senators have said they'll shutdown the government unless Obama agrees to defund Medicare. Marco Rubio even has an essay titled "Shut Down ObamaCare, Not Government" at the conservative blog RedState on Monday. The senator who got that movement started, Utah's Mike Lee, suggested on Sunday that he wanted to keep deep cuts, but spare the Pentagon. "What we need to do is make sensible cuts, not back away from the cuts, but make sure that we're not taking them disproportionately out of those brave men and women who are protecting us," Lee said. Treasury Secretary Jack Lew said the White House would not accept bills that only spared the Pentagon from those spending cuts.

Even so, many other Republican senators have said threatening a shutdown over Obamacare is a dumb idea. Republican Sen. Bob Corker of Tennessee tells the Journal that the GOP senators are meeting with White House aides to "deal with our fiscal issues in more intelligent ways than now exist."