Medicare vouchers plan shelved for now

Medicare reform passed the House. But GOP leaders say they won't push Medicare vouchers in the current round of spending talks.

The GOP plan to replace Medicare with vouchers will have to wait, party leaders acknowledged Thursday as lawmakers and the White House bowed to political realities in pursuing a deal to allow more government borrowing in exchange for big spending cuts.

Both sides hinted at movement and Vice President Joe Biden reported progress from an initial negotiating session.

Spending cuts and increasing the amount of money the government can keep borrowing to pay its bills are "practically and politically connected," Biden said at the start of budget meetings with lawmakers at Blair House, the guest residence across Pennsylvania Avenue from the White House.

The House Republican whose committee oversees Medicare said he's open to other approaches besides the voucher plan that recently passed the House after a contentious debate that appears to have hurt the party with older voters. Republicans got an earful from their constituents on Medicare during a recent congressional recess.

Michigan Rep. Dave Camp, the House Ways and Means Committee chairman, said he supports the GOP approach, but isn't willing to go to the mat for legislation that has no prospects of becoming law.

"I'm not interested in laying down more markers," said Camp. "I'm interested in solutions. ... Let's figure out where there is common ground and let's get there as soon as we can."

Asked about Camp's comments, House Speaker John Boehner, R-Ohio, said they are "a recognition of the political realities that we face." Nonetheless, Boehner said the GOP Medicare remake remains on the table.

"Let me make this clear," Boehner said. "When it comes to increasing the debt limit and the need to have reductions in spending, nothing is off the table except raising taxes."

President Barack Obama and lawmakers of both parties face an Aug. 2 deadline to enact legislation that permits the government to increase its borrowing authority and meet its obligations to lenders. Failure to raise the debt limit beyond the current $14.3 trillion would call into question the creditworthiness of the U.S. government and trigger an economic crisis.

"All of us understand we have got to achieve results," House Majority Leader Eric Cantor, R-Va., said after the meeting. The two sides agreed "to find commonality" and there was "general agreement things have to change," he added.

"You're not going to get to the big nuclear political issues," said a Democratic official in the room. "But there's going to have to be enough give and take on the other pieces that you get enough of a deal to be credible." The Democrat required anonymity to speak more frankly about the negotiations.

"Knowing that we are very far apart between the president, the Senate and where we are, we are not under any illusion that we're going to get some grand slam agreement," House Budget Committee Chairman Paul Ryan told reporters Thursday morning. "Let's get a single or a double, let's get a down payment, let's get some spending cuts, some spending controls as part of this."

With the government borrowing more than 40 cents of every dollar it spends, Republicans see the need to increase the debt limit as an opportunity to make deep spending cuts. Benefit programs such as Medicare and Medicaid could face some cuts, but not the overhaul called for in the House GOP budget plan.

Cantor came to the talks with $715 billion in proposed savings — culled from a GOP budget plan that passed the House last month — from other benefit programs, including cuts to farm subsidies, loan subsidies for college and graduate students, and food stamps, according to an aide.

Camp said Obama's debt commission pointed to cuts that can be made in Medicare. One big item would involve revamping Medicare's rules so beneficiaries pay a greater share of everyday medical expenses but gain more protection from catastrophic costs. The bipartisan plan also would squeeze savings from drug makers, hospitals and home health agencies.

In addition to Cantor, Thursday's group included the second-ranking Senate Republican leader, Arizona's Jon Kyl; the chairman of the Senate Appropriations Committee, Hawaii Democrat Daniel Inouye; the chairman of the Senate Finance Committee, Montana Democrat Max Baucus, and senior House Democrats Jim Clyburn of South Carolina and Chris Van Hollen of Maryland. Treasury Secretary Timothy Geithner and White House budget director Jacob Lew were the top-ranking administration officials backing up Biden.

As senior as the group is, it'll take the involvement of the president himself, as well as Boehner and the top leaders in the Senate to reach an agreement.

The deficit could reach $1.6 trillion this year, so both sides are setting modest expectations. But they said the meeting offered a chance to identify even small cuts that can build toward a broader agreement.

Treasury Secretary Timothy Geithner took some pressure off the talks when he told Congress this week that the government can meet its obligations through Aug. 2, by using a series of bookkeeping maneuvers. That's nearly a month longer than the July 8 deadline Geithner had cited previously.

The government is borrowing an average of $125 billion a month.

House Republicans have passed a budget blueprint that aims to cut spending by more than $5 trillion over the next decade. Biden sought to flesh out a plan that President Barack Obama outlined last month that would reduce deficits by $4 trillion over 12 years.

Obama's proposal calls for about $1 trillion in higher tax revenues, a nonstarter with House Republicans.

Negotiators planned to meet again Tuesday.