Obama Avoids Debt Crisis, But Other Standoffs Loom

President Obama kept a low profile Monday, the last day before the default deadline set by his administration. The president played a role, though, as Congress struggled to accept the debt ceiling deal the White House worked out with congressional leaders.

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STEVE INSKEEP, host:

Let's go next to NPR White House correspondent Ari Shapiro, who is on the line.

Ari, good morning.

ARI SHAPIRO: Good morning, Steve.

INSKEEP: So we heard some of the criticisms there in David's piece. Deficit hawks say this bill doesn't do as much as they would like to reduce the long-term deficit, long-term debts. People on the left say it's not going to really help the economy or joblessness.

SHAPIRO: Mm-hmm.

INSKEEP: What are people thinking at the White House?

SHAPIRO: Well, here's a hint. At the start of yesterday's press briefing, spokesman Jay Carney said to everybody in the room, if you look outside you may have noticed the cloud of uncertainty has been lifted over our economy. So like all of Washington, I think the White House is feeling a real sense of relief right now that the worst has been averted.

But that's informed by real disappointment that this is kind of a lowest common denominator plan. Everything in it was on the table months ago. And as recently as last weekend, we heard the president and his surrogates pushing for a broad deal that would overhaul some of the fundamental programs - Medicare, Medicaid, Social Security, tax reform, things like that. That didn't make it across the finish line. That's a real disappointment to the White House. Instead, we've ended up with something that nobody loves but enough people will tolerate.

And also this does not create any good will within the president's own party. As we heard, Democrats in Congress are referring to this deal as bizarre, as evil, in one case as a Satan sandwich.

INSKEEP: OK. So some harsh language there, but you just mentioned some of the larger concepts - tax reform, changing Medicare and the way that that is billed, in the way that is paid. There are ideas here that people on both sides seemed close to signing onto, and can they plausibly again? Could some of these larger proposals still be alive?

SHAPIRO: Absolutely. You know, one way to think of this whole structure is as a layer cake. So layer one was baked a long time ago; layers two and three didn't quite make it out of the oven, but now we've got this congressional committee that's going to look for another $1.5 trillion in deficit reductions. And supporters of that kind of grand bargain plan, including officials at the White House, hope that those other layers of the cake could come out of the congressional committee.

And there's reason to be hopeful. After all, there are only so many ways to find $1.5 trillion to save, and a lot of people think that's going to have to involve changes to Medicare, Medicaid, Social Security and to the tax code. But of course there are obstacles. This committee is likely to going to include some Republicans, who have taken a pledge never to raise taxes. It will likely include some Democrats who say they will not touch entitlement programs.

So it's not going to be an easy negotiation, but both sides have a real incentive to reach a deal, because the alternative, if they don't reach a deal, which is dramatic cuts in both domestic and defense spending; that's something that neither party wants or is willing to tolerate.

INSKEEP: Well, does that make, isn't it December 23rd when this committee's recommendations are supposed to be voted on? That's going to become another crisis point here, or could become another crisis point.

SHAPIRO: Oh yeah, and that's hardly the only crisis point. I mean, even setting aside that super-committee, the issues in this standoff are going to inform debates leading up to and beyond the 2012 election. For example, right around the corner there's another standoff over next year's budget, which could result in the same threat of a government shutdown that we saw at the beginning of this year and that debate is going to be over the same taxes, spending cuts, role of government, the tension between regulation and business interests - all the issues that we've been hearing hashed out over the last weeks and months.

The good news, if you can call it that, is that the threat of a government shutdown at least is not as disastrous as a threat of the U.S. government defaulting on its debts and getting a credit downgrade. But these issues are in no way gone. They're going to keep playing out in the weeks and months ahead.

INSKEEP: Okay, so we've got this compromise. Most of the effects, reducing the deficit, are in the future, several years out, out to a decade out. Are people at the White House now, Ari, talking about things that they could do to deal with the weak economy now, do with this Congress?

SHAPIRO: Yes, in fact they've been talking about that for weeks and months, but Congress has just been otherwise occupied. There are things sitting in front of lawmakers for example, trade deals, an infrastructure bank, patent reform these are all things that the president has long argued could create jobs today. But Congress has not been acting on it.

I think you can expect to see the push for Congress to act on these things grow in volume now that the debt ceiling crisis has been averted.

INSKEEP: Ari, thanks very much.

SHAPIRO: You're welcome.

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