Politics
5:29 pm
Thu July 7, 2011

The Politics Behind The Debt-Ceiling Drama

The scene has become strikingly familiar over the 2 1/2 years of the Obama administration: congressional leaders footslogging in front of cameras to the White House for another "bipartisan" meeting to resolve yet another stalemate.

This time, however, the Thursday morning debt-ceiling confab in the Cabinet Room opened with a slightly different feel.

The president's hair was visibly grayer. The stakes — the possibility that the nation could default on its debt for the first time in its history — were higher. And there was a palpable sense that a panic point had arrived and that both sides were preparing to take a path to a budget and debt-ceiling deal that would put them at odds, gently speaking, with their bases — from Republican Tea Partiers to Democrats in the MoveOn.org crowd.

"There's going to be pain involved politically on all sides," Obama said when he emerged from the no-deal-yet meeting, only to announce another on Sunday.

The president is already getting excoriated by progressives alarmed at White House willingness to put entitlement program cutbacks on the table. And Republican House Speaker John Boehner, who has met privately with the president in recent days to lay groundwork for a deal, faces the seemingly insurmountable task of selling tax loophole eliminations that some in his caucus view as tantamount to tax increases.

Some congressional Republicans have also begun agitating to add a balanced budget amendment to the mix.

But as the August deadline creeps closer, and the specter looms of having to choose between paying the military or sending out Social Security checks, the "Deal or No Deal" drama over the nation's budget, deficit and debt ceiling appears headed for an end that will reverberate long into the 2012 election season.

"If the president and the speaker are going to hold hands and jump in together, the problem will be from the wings of the parties," says GOP strategist John Feehery.

"It becomes, for both sides, a game of 'can I win my primary?'" he says.

There's also the more immediate challenge of whether Boehner can get his leadership to support him, and whether the president can get House Democratic Leader Nancy Pelosi in his corner.

Third Rail No More?

One other consequence of the down-to-the-wire dealmaking:once-sacred entitlement programs could face changes.

A new Pew Research Center poll shows that there is broad public opposition to possible reductions in benefits provided by Social Security, Medicare and Medicaid, according to poll director Andrew Kohut.

But, says Democratic strategist Peter Fenn, "I think a lot of people are recognizing that they're no longer the third rail of American politics." And they shouldn't be, he argues, as long as changes are done "fairly and equitably."

He characterizes the president's gambit of proposing to cut the deficit by $4 trillion over the next decade, and the reports that the White House is considering changes in annual Social Security cost of living (COLA) adjustments, as "leapfrogging the Republicans politically."

"What he's done is force them to deal with the revenue as well as the spending side of the budget," Fenn says.

He asserts that the president's effort will help him "a great deal with independent and moderate voters" key to his re-election effort next year.

But the president's once-solid base, already disillusioned on matters including war and extending the Bush-era tax cuts, is furious.

After the White House meeting, Pelosi said that she believes the president's goal of cutting the deficit by $4 trillion over 10 years is possible without touching entitlement programs. House Democrats, she says, won't support a deal that cuts Medicare and Social Security benefits. She is scheduled to return to the White House Friday to meet with Obama.

"I'm not totally surprised that the COLA is under discussion — there have been inklings about this for some time now — but I'm completely disappointed," says Max Richtman of the national Committee to Preserve Social Security and Medicare. "I'm not sure what repercussions there will be from seniors and people counting on Social Security."

The COLA is currently tied to the consumer price index, and is compounded annually.

MoveOn.org has urged its members to call the White House with the message: "No deal where seniors pay. No deal where the rich and corporations don't."

Political Fallout

The Republicans have already embraced the political fallout of tampering with the third rail. They did it when the House voted to adopt Wisconsin GOP Rep. Paul Ryan's budget, which proposed dramatic changes to Medicare and Medicaid programs.

Democrats pounced on the public alarm over Ryan's budget, and appeared poised to ride the issue into the 2012 race.

"The Republicans have been surprisingly willing to talk about Medicare and Social Security," says Paul Van de Water, a senior fellow at the left-leaning Center for Budget and Policy Priorities. "They are certainly not ignoring the political implications of this."

Van de Water, however, notes that Social Security, which is seen as solvent through 2036, has not been a contributor to the current deficit problem.

Unsettled And Unsettling Times

With Americans feeling increasingly insecure about their financial futures, this is tough political terrain for a Democratic president already seen by many of his supporters as giving up too much in spending cuts without exacting revenue increases.

The president could always do a temporary debt ceiling increase, Feehery says, that would get the country through a couple months without default and allow more time for a deal.

Feehery, along with a number of prominent Republicans, has argued that the president is offering a deal they shouldn't refuse.

"The president has offered up $4 trillion in cuts, likely including some to Medicare, Medicaid, and Social Security, and closing some tax loopholes," he says, " And Republicans should vote for that."

"It would be a good down payment," he says.

Good, say many of Obama's once-ardent supporters, but good for whom?

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