US debt talks: 'trust gap' between negotiators, rank and file in Congress

With the collapse of prospects for a “grand bargain,” President Obama and congressional leaders return to debt talks Monday to find common ground for a more modest measure.

Instead of a package of spending cuts, revenue increases, and entitlement reforms in the $4 trillion-plus range, the talks will aim at a lower target, focused mainly on spending cuts.

The time for a deal is narrowing, as the Treasury maintains that the United States will run out of borrowing capacity on Aug. 2. About 40 percent of current spending is on borrowed funds. But as serious as the narrowing time frame is, the trust gap between negotiators and the rank and file in both parties is only widening.

Through private meetings and back channels, the president and Speaker John Boehner (R) of Ohio have been feeling out the possibilities of a historic debt deal to include spending cuts as well as entitlement and tax reform.

Details of the talks have been largely secret, but press reports and selective leaks fueled fears on both sides of the aisle that their respective leaders were either weak or on the verge of betraying crucial party values.

For Republicans, that value is no tax increases, especially in a severe economic slump. For Democrats, it’s no cuts to beneficiaries of Medicare and Social Security, especially if the wealthiest Americans aren’t called on for comparable sacrifice. Late last week, frustration broke out in both parties, amid reports that a “grand bargain” could take shape by Sunday.

“Both the Republican and Democratic caucus get frustrated each day in not knowing what’s fact or fiction,” said freshman Rep. James Lankford (R) of Oklahoma, referring to press reports of a $4 trillion deal. “The last thing we want is to have to vote quickly on something this big.”

“We shouldn’t be making momentous decisions about the future of Medicare and Social Security by six people in a room,” says Rep. Rush Holt (D) of New Jersey. “These are major pieces of America’s economic and political structure."

Former Speaker Nancy Pelosi (D) of California, who had been left out of the back-channel talks between Mr. Obama and Speaker Boehner, said after a caucus meeting on Friday that there must be “no benefit cuts in Medicare and Social Security.” She added, "We have serious concerns about what’s happening with Medicaid as well.”

Meanwhile, Boehner was fielding strong opposition from his own members to reports that billions of dollars in tax increases were on the table. He put an end to speculation in a statement on Saturday.

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes,” he said. “I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase."

Neither side wants to be presented with a fait accompli at the last moment and told they have to vote for the deal or take the blame for the first-ever US default on national debt.

“The bar is high this time because the trust factor is low,” says Michael Franc, vice president for government affairs at the Heritage Foundation, a conservative think tank in Washington.

Many Republicans felt they got burned on a fiscal year 2011 spending bill that fell far short of the $100 billion in cuts that many had promised in their 2010 campaigns. Members are in a “trust but verify mind-set,” Mr. Franc adds.

On April 14, 59 House Republicans and 108 Democrats voted against the final measure, negotiated largely between Boehner and the White House, that promised $39.9 billion in cuts. But subsequent analysis signaled that many of those cuts were of funds that would not have been spent – just smoke and mirrors, Republicans said.

Despite significant divisions within party ranks, both sides blame the other for the breakdown of the talks.

"The debt limit talks broke down because Republicans continue to stick to their political playbook, calling for cutting Medicare and Social Security to preserve tax cuts for millionaires and subsidies for Big Oil,” said Rep. Edward Markey (D) of Massachusetts in a statement.

“It’s disappointing that the president is unable to bring his own party around to the entitlement reform that he put on the table,” said Don Stewart, a spokesman for Senate minority leader Mitch McConnell (R) of Kentucky.