April 11 (Bloomberg) -- President Barack Obama’s $3.8 trillion budget offers those Senate Republicans who have shown they’ll negotiate with the administration a possible path to restarting talks on a multiyear deficit-reduction plan.
While Republican congressional leaders criticized Obama’s call for raising government tax revenue, some of the party’s lawmakers who’ve emerged as a force on the polarizing issues of immigration and gun control said they saw an opening for talks in the months ahead on the nation’s fiscal future.
Obama’s budget “has some signs of compromise in it,” Republican Senator John McCain of Arizona, who’s played a central role on immigration, said yesterday. It shows “willingness to address, at least to some degree, the entitlement issue. I hope that we will have further negotiations.”
The president’s budget gambit is a repeat of an offer previously made to congressional Republicans to change the cost-of-living calculation for Social Security, which would increase benefits more slowly, and raise premiums for higher-income Medicare beneficiaries. Obama is putting those measures in his budget for the first time in exchange for more taxes on the wealthiest Americans to reduce U.S budget deficits. Republican leaders have rejected the tax proposal.
White House Dinner
As part of his courting of lawmakers, Obama hosted a White House dinner last night for a dozen Republican senators including Florida’s Marco Rubio, another key player in the immigration debate, and Maine’s Susan Collins, who with McCain is among the Republicans who’ve said they won’t block debate on firearms legislation.
The budget framework should be enough for Obama to start discussions with a “working center” of senators interested in striking a deal, said former Senate Budget Committee Chairman Judd Gregg, a New Hampshire Republican who didn’t seek re-election in 2010.
While resistance to Obama’s budget approach has been staunch in the Republican-controlled House, the constituency for a middle ground has grown within the Senate. That represents Obama’s most promising route to a deal that ultimately also could win backing from party leaders, Gregg said.
“The next step is, does he want to take responsibility for moving it forward. That means he has to be in the room, or his senior people have to be,” as detailed negotiations occur, Gregg said.
The dinner with Republican senators -- the second Obama has held this year -- is “a positive step,” he added.
William Hoagland, a former Republican Senate budget aide, said, “it’s clear where the president believes the center of gravity is right now in the Senate, and I think he’s right.”
Last night’s session, at which steak was the main course, was organized by Senator Johnny Isakson, a Georgia Republican. Gregg called him “a classic get-things-done conservative” who is “highly regarded” among Senate Republicans.
A White House statement issued after the nearly three-hour get-together said Obama “enjoyed a constructive, wide-ranging discussion with Republican senators that included reducing the deficit in a balanced way, reforming our broken immigration system and adopting common-sense measures to reduce gun violence.”
Isakson, in a statement, termed the dinner “very productive” and “a good first step to what I hope will be an ongoing discussion and a path forward to solving our nation’s problems.”
While efforts by Obama and Republican leaders in 2011 and 2012 to reach a “grand bargain” on the government’s finances floundered, a need to raise the U.S. debt limit over the summer may serve as an “action-forcing event” to bring the new talks to a conclusion, Hoagland said.
Congress and the president must also agree on funding for the government by the start of the new fiscal year on Oct. 1.
Before last night’s dinner, Obama suggested it was time for Republicans to give ground in their opposition to his revenue proposals when he went before television cameras yesterday to release his budget plan.
“When it comes to deficit reduction, I’ve already met the Republicans more than halfway,” Obama said in the White House Rose Garden. He challenged Republicans to demonstrate they are “as serious about the deficits and debt as they claim to be.”
Obama portrayed the spending proposals in his budget plan, such as $50 billion for infrastructure and $1 billion to improve higher education, as necessary to accelerate U.S. economic growth.
The world’s largest economy grew 0.4 percent in the last quarter of 2012. While payrolls jumped by 268,000 workers in February, the biggest gain in a year, the advance slowed to 88,000 in March. Still, the benchmark Standard & Poor’s 500 Index has risen 11.3 percent since the start of the year.
Obama’s fiscal 2014 budget hit resistance even before its release, as Republican leaders repeated their opposition to raising any new tax revenue and some Democrats and party allies such as labor unions criticized the president’s proposal to reduce cost-of-living benefit increases in Social Security.
Republican lawmakers, after protracted negotiations with the administration, reluctantly agreed at the start of this year to increased tax rates on income above $400,000 for individuals and $450,000 for married couples. In the House, where anti-tax Tea Party adherents hold greater sway then in the Senate, Republican leaders have stressed their opposition to any more tax increases.
“The president got his tax hikes in January,” House Speaker John Boehner, an Ohio Republican, said yesterday in Washington.
Still, Senate Majority Leader Harry Reid, a Nevada Democrat, and Senate Republican Leader Mitch McConnell of Kentucky are likely to give their “tacit agreement” for a coalition of senators to explore ground for an agreement even as they avoid a public role, Gregg said.
At least two camps among Senate Republicans are interested in coming to a deal on fiscal issues, Hoagland said.
One group including McCain, Lindsey Graham of South Carolina, Kelly Ayotte of New Hampshire and Saxby Chambliss of Georgia is alarmed at the impact of rising cuts to the defense budget under the across-the-board spending cuts known as sequestration and is anxious to avoid deeper cuts next year that would occur without an agreement, Hoagland said.
Another group including Lamar Alexander of Tennessee, Rob Portman of Ohio, and Tom Coburn of Oklahoma are “pragmatists” who want to seize the moment to win reductions in spending on entitlement programs, he said.
Alexander was among the senators who dined with Obama last night, as was John Thune of South Dakota -- the Senate’s third-ranking Republican. Graham, Chambliss and McCain were among those a private dinner at a Washington restaurant on March 6.
A deal that could pass muster with Senate Republicans would “isolate” House Republicans and put political pressure on them to go along, Hoagland said.
The approach mirrors the path the White House is taking on one of Obama’s second-term priorities, an overhaul of immigration laws. A bipartisan group of four Republicans and four Democrats in the Senate has taken the lead in negotiating an agreement.
Senators Joe Manchin, a West Virginia Democrat, and Pat Toomey, a Pennsylvania Republican, are leading a bipartisan move to advance firearms legislation. They announced yesterday an agreement on a measure to expand background checks for gun purchasers.
Obama’s proposed entitlement cuts help move negotiations forward even though they repeat an offer he made in negotiations with Boehner in December, said Eric Ueland, who served as chief of staff to former Senate Majority Leader Bill Frist, a Tennessee Republican. A budget proposal is more concrete and more clearly puts the president’s political prestige on the line, he said.
“There is a manifest ownership of something reduced to black and white and shared with the general public as well as Congress,” said Ueland, now a lobbyist with the Duberstein Group in Washington. “That was missing over the last two years of closed-door negotiations with very abstract and fuzzy explanations of what was going on.”
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