Debt Talks at Crucial Stage

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The Wall Street Journal
By: Janet Hook & Carol E. Lee
June 14, 2011

Deficit-reduction talks led by Vice President Joe Biden face their biggest test starting Tuesday when the group begins three days of politically sensitive discussions, including a proposal for a government spending cap that is bitterly opposed by the White House.

Mr. Biden had deliberately put aside the tough topics during the group's first meetings, suggesting members first focus on the "low hanging fruit" of cuts that could be accepted by both parties, a White House official said.

Now, the bipartisan group is picking up the pace with the aim of crafting the beginnings of a deal by July 1.

The panel got off to a slow start in early May under a cloud of skepticism. House Majority Leader Eric Cantor (R., Va.) openly lamented its potential fate as "yet another arena of political theatre." Mr. Biden invited ridicule by falling asleep during President Barack Obama's speech announcing its creation.

But both Biden and the panel have risen in stature as it's become clear just how crucial their role will be in reaching a deal to raise the government's $14.29 trillion debt ceiling. Treasury Department officials have said the government could begin defaulting on its obligations as soon as Aug. 2 if the borrowing limit is not raised, but Republicans say they won't vote to do so unless agreement is reached on a plan to dramatically slow federal deficits.

The group is making progress where others have failed this year by hanging together, a feat several members attribute to the vice-president's ability to persuade hardened partisan warriors to lay aside talking points and look for areas of agreement.

"The success of these talks is due to the vice president and the way he's conducted the meetings,'' Mr. Cantor, who is featured with Mr. Biden in a new photograph on the wall near the vice president's office, said Monday. "He is desirous, as am I, of keeping politics and ideology out of the discussion."

Colleagues attribute Mr. Biden's success in the group largely to the consensus-building skills he learned in 36 years in the Senate, a career that reached back to a less-partisan era.

Among the polarizing topics still to be addressed is a proposal to impose a dollar limit on federal spending. Republicans and some Democrats have advocated a cap that would be enforced by automatic, across the board spending cuts if Congress did not comply. The White House and Democratic leaders oppose the idea because they say it would force deep cuts to Medicare and other programs, and because they would prefer a deficit-reduction plan that also included tax increases.

The panel is expected to hand off whatever beginnings of a plan it has crafted to Mr. Obama and top party leaders, including House Speaker John Boehner (R., Ohio) and Senate Majority Leader Harry Reid (D., Nev.) before the Fourth of July weekend.

The participants have made a pact to keep the details of their discussions private. So Mr. Biden surprised panel members by offering an uncharacteristically detailed progress report after a meeting last month. He said he expected the group to quickly agree to about $1 trillion in deficit reductions.

At the next meeting, Mr. Biden explained that he wanted to offer some evidence that the group was making progress in spite of their lack of concrete agreements, said Sen. Jon Kyl (R., Ariz.), a panel member.

"He's been very sensitive to the fact that you have a lot of views around the table," said Rep. Chris Van Hollen (D., Md.), also a panel member. "He's able to defuse tension, use his humor to make people comfortable."

The group also includes Sen.Daniel Inouye (D., Hawaii) and Max Baucus (D., Mont.) and Rep. Jim Clyburn (D., SC).

At the outset, participants said, Mr. Biden lived up to his reputation for long-windedness. As the talks proceeded, he gave more air time to others and became more of a moderator and referee. "He keeps things even and balanced and moving forward," said one official familiar with the talks. "When he's in the room, everyone's polite and lets everyone finish their point. They are very conscientious about not going on too long. When he's not in the room people are quicker to talk over each other, interject, have more rapid-fire exchanges."

Mr. Biden's peace-broker role was underscored at the group's sixth meeting last Thursday.

Treasury Secretary Timothy Geithner made the case for including tax increases in the deficit reduction plan, reviewing Mr. Obama's proposals for increasing revenues, people familiar with the meeting said. Mr. Cantor responded with his oft-repeated assertion that the Republican-controlled House will not approve any tax hike.

Mr. Biden told Messrs. Cantor and Kyl that he was not asking them to accept the tax proposals, but for them to listen to the options Democrats were proposing. After Mr. Biden left the meeting, people briefed on the talks said the lawmakers and White House staff continued their discussions but the exchange grew distinctly more heated.

--Damian Paletta contributed to this article.

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