Obama focuses on 2013 debt ceiling goal

Neil Munro White House Correspondent
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The default deadline is just days away, and frustrated Democrats are rallying around a core demand: They want a debt extension large enough to avoid another painful debate prior to the 2012 election.

But GOP leaders, including House Speaker John Boehner, have focused on a short-term increase, partly because that would help them win support from caucus members who are already loath to approve more government overspending. (RELATED: White House, Republicans spar over length of debt limit increase)

One possible Boehner plan would seek $1 trillion in extra debt in exchange for $1 trillion in 10-year spending cuts. That would fund government until early 2012.

Democrats have already backed away from earlier demands for an unconditional debt increase, from their initial demand for $1.2 trillion in tax increases, and then from a demand for a “big deal” that would boost President Barack Obama’s credentials as a D.C. consensus builder.

They are, however, still demanding a $2.4 trillion debt increase that would fund government programs until after the 2012 election.

Administration officials pushed that particular budget deal on the Sunday talk shows; White House flacks promoted it via Twitter, and Democratic Senators and Representatives followed suit in numerous media interviews.

Boehner’s short-term plan is “a non-starter in the Senate and with the President,” Senate Majority Leader Harry Reid said Sunday.

A short-term bill won’t make it to the President’s desk, Treasury Secretary Timothy Geithner said Sunday. House Minority Leader “Nancy Pelosi has said she will not vote for that approach, and it will not make it’s way through the Senate, so that’s not a viable option,” he said on CNN’s State of The Nation show.

White House officials want enough money to get to 2013 because that would prevent a pre-election debt ceiling debate.

Obama is positioning himself to run in 2012 as a fiscal moderate, a D.C. consensus builder, and the public’s defender in a corrupt Washington D.C. He also needs to unite his diverse coalition. But those goals would be hindered by another debt ceiling debate in which he would be asking for even more debt, entangling himself in controversial budget politics, and arguing with his base over what possible budget cuts might be conceded to the GOP.

Reid’s plan, as sketched late on Sunday, would allow 10-year cuts of $2.7 trillion in exchange for $2.4 trillion in extra budgeting authority. That’s enough extra credit to fund current spending until after next year’s election.

Details of the Reid’s $2.4 trillion proposal were not released. But Hill staffers report the deal would include no tax increases, and up to $2.7 trillion in budget cuts.

But those budget cuts may actually be cuts in what Obama has called “spending in the tax code.” If so, the proposal would raise tax revenue by cutting tax breaks for industry and taxpayers.

Reid’s proposed cuts may include large savings from spending that would have occurred if the U.S. still had a large force fighting in Iraq. In effect, those savings would come from cuts to nonexistent programs.

Reid’s spending package may also cut the Pentagon’s budget by more that the $400 billion over 10 years, as Obama has urged.

Senate Democrats are unlikely to endorse significant reforms to entitlement programs, and may prefer to slice Medicare funding allocated to pay the health sector.

Reid’s proposed cuts may also be backloaded into the final few years of the 10-year plan, making them less likely to be implemented.