Dems raise their asking price for a deal

Democrats are increasing their demands on what should be in a deficit deal, seeking to shield entitlement programs and insisting on raising the nation’s debt ceiling this year. 

In the wake of President Obama’s reelection and Democratic gains in Congress, party leaders are growing bolder as the Dec. 31 deadline for extending the Bush-era tax rates and stopping automatic spending cuts approaches.

{mosads}While Democrats are seeking to use their new political capital, Republicans are refusing to increase tax rates. That dynamic indicates the parties are moving further away from a deal. But political insiders note that both sides are playing leverage games, jockeying for the best agreement they can get before the December holidays.

Democratic leaders say any pact to avoid the fiscal cliff should raise the debt limit so Republicans cannot demand additional spending cuts when the nation’s borrowing authority needs to be increased in early 2013.

“We would be somewhat foolish to work out something on stopping us from going over the cliff and then a month or six weeks later Republicans pull the same game they did before and say, ‘We’re not going to do anything — unless this happens, we’re not going to agree to increasing the debt ceiling,’ ” Senate Majority Leader Harry Reid (D-Nev.) told reporters Tuesday afternoon.

“I agree with the president, it has to be a package deal,” he added.

That represents a shift for Reid. The day after the election, Reid said he expected negotiations to raise the debt limit to happen next year.

“I think that the debt ceiling will come after the first of the year,” he said at the time.

Senate Democratic leaders signaled Tuesday they would not agree to any entitlement reforms before the end of the year that cut spending on Medicare and Medicaid beneficiaries.

They also said that any year-end deal to avoid the expiration of tax cuts and implementation of spending cuts — known as the fiscal cliff — must include a provision to raise the debt ceiling, which would otherwise have to be addressed early next year.

The White House and Reid have indicated they will not consider cuts to Social Security, a notable change from 2011, when President Obama said “everything is on the table,” including entitlement programs dear to his party’s base.

“Progressives should be willing to talk about ways to ensure the long-term viability of Social Security, Medicare and Medicaid, but those conversations should not be part of a plan to avert the fiscal cliff,” Senate Majority Whip Dick Durbin (D-Ill.) said in a speech at the Center for American Progress Action Fund on Tuesday. 

A Senate Democratic aide said Durbin believes Congress should look at Medicare and Medicaid reforms as part of long-term deficit-reduction talks, but separately from a short-term deal to avoid the cliff.

Another senior Senate Democratic aide said Reid agrees with Durbin and does not think a deal to avoid the fiscal cliff should cut any Medicare or Medicaid benefits.

Reid on Tuesday said he would consider cuts to Medicare, however, that did not affect beneficiaries.

“I personally believe there are things that we can do with entitlements that don’t hurt beneficiaries,” he said.

Democrats say Republicans must first agree to raise income tax rates on families earning over $250,000 annually before negotiations begin on an overhaul of the tax code and entitlements.

“We hope that they can agree to the tax revenue that we’re talking about, and that is rate increases, and as the president’s said on a number of occasions, [then] we’ll be happy to deal with entitlements,” Reid said.

Reid has taken the firm stance since the spring of 2011 that Social Security reform should not be part of a deficit-reduction deal — and he has apparently swayed Obama to his side. 

White House press secretary Jay Carney told reporters on Monday that Social Security should be kept separate from the fiscal-cliff talks: “We should address the drivers of the deficit, and Social Security currently is not a driver of the deficit.”

Obama last year agreed with Boehner to change the consumer price index for Social Security before their “grand bargain” on taxes and spending imploded. That concession from Obama infuriated congressional Democrats.

Senate Republican Leader Mitch McConnell (Ky.) expressed disappointment that Obama had moved Social Security off the table and now is considering shielding Medicare and Medicaid from significant reforms.

“I think all of the entitlements need to be discussed, because they all, to one degree or another, are on an unsustainable path,” McConnell said Tuesday. “We want to save these programs, and I understand the dilemma the president and the majority leader have. Their hard left doesn’t want to change anything, ever.”

McConnell has also balked at the White House plan to raise $1.6 trillion in revenue, calling it “a joke.”

Congressional Republicans say they are willing to put revenue on the table by closing tax loopholes — not raising tax rates. House Minority Leader Nancy Pelosi (D-Calif.) has said raising tax rates is a must.

Obama and congressional Democrats have come under heavy pressure from labor unions and liberal advocacy groups in recent days to back off of proposed cuts to entitlement programs.

Hundreds of union members were scheduled to visit Capitol Hill this week to lobby lawmakers to oppose cuts to entitlement programs. The AFL-CIO, the American Federation of State, County and Municipal Employees, the National Education Association and the Service Employees International Union are participating in the campaign.

The groups are pushing Obama and Democratic leaders to oppose raising the Medicare eligibility age, which the president endorsed during talks with Boehner last year.

Durbin, who is close to Obama and was one of the earliest backers of his 2008 presidential campaign, threw cold water on the prospect of changing Medicare eligibility, recalling the plight of his older brother, who lost employer-provided healthcare after suffering a heart attack.

“What I want to hear is the assurance [or] guarantee that people like my brother will have access to affordable healthcare insurance during any interim period of time from retirement until they actually qualify for Medicare,” he said.