Republicans meet with Biden amid budget pressure
WASHINGTON (Reuters) - Vice President Joe Biden held budget talks with U.S. congressional leaders on Thursday as Republicans came under pressure to scale back their spending-cut plan to slash domestic programs by 25 percent.
President Barack Obama and his fellow Democrats are at odds with Republicans over how to shrink the budget deficit, which is due to reach a record $1.65 trillion this year, and keep the federal government running through September.
A temporary funding bill expires on March 18.
"We had a good meeting, and the conversation will continue," Biden said in a statement after the closed-door, one-hour talk on Capitol Hill with top Republican and Democratic leaders.
Republicans propose cutting spending by $61 billion through September. But Obama, many Americans and a financial titan highly respected on Wall Street say that is too much.
Biden, who helped negotiate a tax-cut deal with Congress in December, met party leaders from the Senate and House of Representatives on Capitol Hill, including Republican House Speaker John Boehner and Democratic Senate Majority Leader Harry Reid.
The Obama administration is offering $6 billion in cuts from current levels.
"We are willing to cut spending further if we can find common ground," White House National Economic Council Director Gene Sperling said.
Republicans, spurred on by Tea Party fiscal conservatives, showed little willingness to soften their proposals.
"I don't think compromise right now is the option," said Representative Scott DesJarlais, one of the 85 first-term House Republicans elected last fall on the strength of a conservative groundswell. "We were sent here to cut spending."
A top official at the world's biggest bond fund manager called for measured austerity measures to avoid harming the economy.
"Let's cut the deficit, but let's do it gradually," Bill Gross, PIMCO's co-chief investment officer, told Reuters Insider. PIMCO is the world's biggest bond fund manager.
Congress avoided a government shutdown by approving a short-term spending bill this week but major disagreements remain. Both parties acknowledge the need this year to cut the deficit, projected to equal 10.9 percent of the economy.
But Democrats argue that reducing government spending too much would hurt the shaky economic recovery and result in hundreds of thousands of job losses at a time when unemployment stands at 9 percent.
Democrats who control the Senate are preparing a measure that would keep funding essentially flat.
BALANCE FOR BOEHNER
Many political observers said Boehner won the initial round of the budget debate when lawmakers agreed on Wednesday to a two-week budget extension that included $4 billion in relatively noncontroversial cuts.
But even as he harnesses the budget-cutting enthusiasm of the conservative Tea Party activists, he risks alienating the broader public. A poll released on Thursday found that most Americans do not share the passion for deep spending cuts.
The Wall Street Journal/NBC News poll found that more than half of those surveyed fear that Republicans would cut spending too deeply, while 70 percent of Tea Party backers worry they would not go far enough.
The Obama administration says that beyond the $6 billion in cuts from current levels it is also proposing reductions totaling $44.8 billion already contained in bills to keep funding the government.
Although Democrats are pitching the $44.8 billion as a spending cut, it is essentially keeping spending flat as the base for comparison is not current spending levels but spending that Obama sought last year in a budget that was never enacted.
If lawmakers are unable to reach a deal by March 18, Republicans will put forward another stopgap spending measure that cuts $2 billion per week, House Republican Leader Eric Cantor said.
The White House-led talks may ultimately yield an agreement to cut $25 billion to $35 billion in the current fiscal year, which may prove a tough sell for Boehner with freshman Republicans, said Ethan Siegal of The Washington Exchange, which tracks Washington for institutional investors.
"He needs to walk them back from the cliff. He needs to convince them, 'We're going to get more down the road,'" Siegal said.