(J. Scott Applewhite / Associated…)
Deficit-reduction negotiations will continue essentially around the clock next week as Vice President Joe Biden and congressional leaders seek to resolve the stand-off over raising the nation’s $14.3-trillion debt limit and send jittery financial markets a message that Washington can tackle its fiscal problems.
Biden said that negotiators are aiming for $4 trillion in deficit reduction over the next decade even as the differences remain on the core issues of taxes and Medicare health spending.
"Now we're getting down to the real hard stuff: I’ll trade you my bicycle for your golf clubs," Biden said. "The really tough stuff that is left are the big ticket items – and philosophically big ticket items."
Negotiators emerged from this week's third and final meeting late Thursday upbeat that all sides remained committed to reaching an agreement.
They have combed through virtually every aspect of the federal budget over the last three days to find areas of potential agreement on savings. A final deal would need bipartisan backing, Biden said, and could not be approved only by Democrats or Republicans.
Rep. Eric Cantor of Virginia, the majority leader who is representing House Republicans, said the evening discussion was "very good."
"The president and the vice president’s interested, as well, in trillions of dollars of savings," Cantor said. "We're trying to get there."
Biden and congressional negotiators agreed to carve out several hours each day for meetings next week while staff will be working essentially around the clock. The goal is to reach an agreement by early July. That would be ahead of the Aug. 2 deadline Treasury has said would be the end of its ability to pay federal debt obligations without new borrowing capacity.
Republicans have refused to vote to raise the nation's debt limit as they insist on at least $2 trillion in spending cuts – an extremely difficult goal. The nation risks an unprecedented default if the borrowing capacity is not increased, budget experts have said.
This week’s talks have focused primarily on the spending side of the ledger and negotiators on Thursday revisited reductions in mandatory domestic programs. Agricultural subsidies and federal pension costs are among such programs that have been seriously considered for cuts.
But getting to a $4-trillion deficit-reduction package would probably require new revenues either through tax hikes or the elimination of certain tax credits, including those for corporate jets or oil companies that Democrats have put on the table but the GOP has adamantly rejected.
The White House has this week introduced a new element -- a payroll tax holiday for employers and the continuation of one for employees -- as a way to stimulate the economy.
"We have almost covered the whole waterfront in the federal budget," Biden said. "Everybody wants an agreement. There’s no principle in that room that doesn’t want an agreement that bends the curve on the long-term debt and is sufficiently realistic to get us to $4 trillion over the next decade or so, in terms of reduction, and in fact will meet the test that everybody has out there whose unwilling to vote for the debt ceiling and say this is real. They’ve done something real."
Biden said it was important to reach an agreement to convince the financial markets that Washington can resolve its fiscal problems.