Pessimism Abounds at Annual Fiscal "Summit"

WASHINGTON (AP) -- On this, some of Washington's highest-ranking budget players can agree: A "grand bargain" this year to close the nation's chronic budget deficits seems like a long shot.

That was the consensus at an annual Washington "fiscal summit" thrown by billionaire deficit hawk Pete Peterson, who's staked $1 billion of his fortune on a foundation aimed at raising public awareness of the dangers of the government's growing debt.

But barely 100 days into President Barack Obama's second term -- supposedly a time of peak possibility in a divided capital city -- a bipartisan squad of Washington's budget big shots was decidedly downbeat on the chances of following up January's big tax increase on the wealthy with a follow-up deal.

"A 'grand bargain' implies you're going to fix the problem, but when you have the majority party in Washington unwilling to embrace the kinds of reforms that make Medicare solvent or make Social Security solvent ... I don't see a grand bargain happening," said House Budget Committee Chairman Paul Ryan, R-Wis., a frequent attendee at Peterson's event.

"The question is," Ryan continued, "'Can we make divided government work and can we make a down payment on the problem? Can we buy the country time and fiscal space?' That's what we're shooting for -- something that's realistic."

The cause for the gridlock is a familiar impasse over tax increases. GOP resolve against tax hikes has only intensified since Obama in January extracted a $600 billion-plus tax hike on the wealthy over 10 years as the price for extending the rest of the Bush-era tax cuts. Without GOP retreat on taxes, Democrats won't offer curbs on rapidly growing benefit programs like Medicare.

Appearing a few minutes later, Ryan's counterpart as top Democrat on the Budget panel offered a similarly pessimistic assessment.

"There is no evidence that we are getting closer to an agreement," said Rep. Chris Van Hollen, D-Md.

Obama's representative, National Economic Council Chairman Gene Sperling, demurred when pressed by moderator Chuck Todd of NBC News about whether he was optimistic of a budget pact.

"He has shown that he is willing to go out of his comfort zone to put forward a real compromise," Sperling said, referring to Obama's proposal to reduce Social Security cost-of-living increases, which has inflamed his liberal allies.

"Deficit reduction is never easy. It's never fun. It requires hard choices. And when you have divided government, whether it's 1997 or now, it requires compromise," Sperling said. "What you need though is for both sides to be able to feel that they achieved enough of their objectives that the compromise in the areas they don't like is acceptable because the plan as a whole is balanced."

"You wouldn't get any sense that the ice was melting or the ground was shifting in any way," said audience member Robert Bixby, executive director of the Concord Coalition, a non-partisan anti-deficit group.

There was less nitty-gritty talk on the budget from Peterson's two marquee guests, former President Bill Clinton and Microsoft founder Bill Gates. Both called for protecting federal investments in science and research. And both fretted about global warming, a topic that's largely slid off of the Washington agenda.

For her part, Senate Budget Committee Chairwoman Patty Murray, D-Wash., was eager to exploit Republicans' refusal to appoint a House-Senate negotiating panel on the starkly different House GOP and Senate Democratic budget plans. She chided Republicans for spending years assaulting Democrats for not passing a budget only to refuse to negotiate under "regular order" now that Democrats have passed one.

Ryan gently pointed out that what Democrats are really after is the right, under Capitol Hill's arcane rules, to offer nonbinding, politically charged budget votes. They can't do that unless an official House-Senate conference committee is named. He observed that such votes would actually harm prospects for an agreement since it would put the House on record against reducing Social Security COLAs, for instance.

To sum up, Congress is not only gridlocked over the budget but it's gridlocked over how to begin negotiating over the budget.

"We can't even get an agreement in principle to begin talking," Ryan said.

Ryan and Sen. Rob Portman, R-Ohio, said an upcoming need to increase the government's borrowing cap could provide the impetus for any potential agreement. But it's increasingly looking as though the deadline for increasing the so-called debt limit won't come until October instead of August, adding months of further budget delays.

That's because the government's finances are doing a little better than had been earlier thought. The Congressional Budget Office offered the latest proof on Tuesday with a study saying the deficit for the 2013 budget year that started last October is running $231 billion below the deficit for a comparable period in 2012. Revenues are running 16 percent higher over the period, while spending is 2 percent less.


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