Deficit Drives Debate As Congress Rides Shotgun

This week in Washington, policymakers will still be wrestling with the domestic economy and the twin burdens of the federal deficit and debt. Host Liane Hansen talks with NPR's Senior Washington Editor Ron Elving about the issue that's driving the debate in Washington and vexing politicians of both parties: the massive federal budget deficit.

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LIANE HANSEN, host:

This is WEEKEND EDITION from NPR News. I'm Liane Hansen.

This week in Washington, policymakers will still be wrestling with the domestic economy and the twin burdens of the federal deficit and debt. Many Republicans are seizing on calls from Democrats to raise the nation's debt limit. Here's House budget committee chairman Paul Ryan.

Representative PAUL RYAN (Republican, Wisconsin, Chair, Budget Committee): Like John Boehner said, for every dollar the president wants to raise the debt limit, we're saying cut at least a dollar's worth of spending because that is the necessary thing to do to stave off a debt crisis.

HANSEN: In recent decades, the national debt has risen dramatically, and the tide of red ink seems to be carrying all other policy issues with it. NPR's senior Washington editor Ron Elving is in the studio. Hi, Ron.

RON ELVING: Good to be with you, Liane.

HANSEN: So, this week there was a significant moment in the debt struggle. We hit the limit - no more borrowing allowed, right?

ELVING: In a sense, yes, at least for a period of time. What happened was that we hit the debt ceiling set by law, which was $14,294,000,000,000 dollars. We hit it right on schedule, as it were. And what didn't happen was that the market didn't crash and the Treasury said it would manage various accounts so as to keep afloat without new borrowing for a matter of about another 10 weeks.

And the idea is to give the White House and the Congress more time to negotiate a deal so that they can raise the limit again, the way they've done nearly 100 times since World War I.

HANSEN: So, they have until August. Are there negotiations going on?

ELVING: Well, there are at least two sets of negotiations going on. One is the so-called Biden group, led by the vice president, and he is meeting with Republican and Democratic leaders from Congress, from both the House and the Senate, and they're focused on the debt ceiling. And they'd like to get some kind of a deal by which the budget deficit would be reduced over the years to go by an amount that would be somewhat equivalent to the new increase in the debt ceiling. So, we're talking hundreds of billions of dollars here when they really probably need to be talking trillions of dollars.

But we may have a serious of stop-gaps where they do it in hundreds of billions and have to come back to it time and again. Now, that would keep the pressure on both sides to keep negotiating but it might not be all that reassuring to the credit markets where the U.S. has to go to borrow money.

HANSEN: And what about the other group - the senators who had a bipartisan group looking into, what, a long-term global deal on the deficit?

ELVING: Yes. And a lot of us were holding out a good deal of hope and faith in that group. But this week, the so-called gang of six - three Republicans, three Democrats in the Senate - suffered a major blow, a perhaps crippling blow. They lost one of their members, Tom Coburn of Oklahoma, who said, well, the Democrats just weren't coming across with enough cuts, particularly in the Medicare program. And this Medicare issue, of course, has been enormously difficult for both parties.

We've just seen in the last week what it did to Newt Gingrich, presidential candidate, who got boxed up in talking about whether or not the plan that the House Republicans had passed, the Paul Ryan budget plan, was too radical, did too much social engineering - to use his phrase - and we saw what that did to his candidacy. And a wide swatch of Republicans rose up to smite him for having talked like that about Paul Ryan.

So, Tom Coburn pulled out of this negotiation with the Democrats, saying the Democrats really had to own up to the difficulties with Medicare and the cost of Medicare in the long run. If he, Tom Coburn, were going to be willing to support any kind of tax increases at all - and that was the predicate of this entire gang of six - that there would be some tax increases to go with larger spending cuts.

HANSEN: We're going to talk more about Coburn's departure from the gang of six in a moment, but what is the Senate going to do with the Ryan budget, the one that the House sent over?

ELVING: It looks like they're going to have a vote on it this week, and that does not make the Republicans happy because they know they're not going to have enough votes to pass it in the Senate - too many Democrats in the Senate - and they don't really want to have to vote on that budget and vote for these big changes in Medicare, making it a voucher and private insurance system. They don't want to vote on that if it's not going to happen, and yet they pretty much have to vote for it, especially after what they saw happen to Newt Gingrich last week.

So, it's a tough position for the Republicans to be in and they would much rather have a vote on some kind of Democratic budget they could be against.

HANSEN: But what do the Republicans in the Senate want?

ELVING: They would like the Democrats to do essentially what Paul Ryan has done in the House - come forward with something tough-minded, something politically unpopular. And in the case of what Kent Conrad and the other Democrats on the Senate budget committee would likely bring forward, that would probably include some unpopular tax cuts, mostly in discretionary spending rather than in entitlement programs like Medicare. And it would also include some kinds of tax increases, whether they were on corporations or on higher-income individuals, some kind of revenue increases the Republicans would like to be able to vote against.

HANSEN: Do you see any hope on the horizon here?

ELVING: This week on Wednesday, there is a public event in town sponsored by the Peter Peterson Foundation. This is an anti-deficit outfit, private and formal group, and it is billed as the fiscal summit 2011. It will bring together the remaining gang of five from the Senate and also Paul Ryan, the man from the House and also former President Bill Clinton. Now, he was the last president to actually bring forward a budget that had a projected balance and even surplus in the future.

So, if you still believe in a place called hope, you can stay tuned next week.

HANSEN: NPR senior Washington editor Ron Elving. Thanks a lot, Ron.

ELVING: Good to be with you, Liane.

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