* Biden group seeks to nail down areas of agreement
* Medicaid health plan could see significant cuts
* Farm subsidies, defense cuts also possible
By Andy Sullivan
WASHINGTON, June 16 Negotiators trying to tame
the United States' spiraling debt could get a better sense on
Thursday of whether they can reach their goal of trillions of
dollars in budget savings.
Vice President Joe Biden and top Democratic and Republican
lawmakers are due to meet at 4 p.m. (2000 GMT) in the Capitol
to assess their progress after several weeks of talks.
The group will try to nail down areas where it has found
common ground despite a deep partisan divide over taxes and
health benefits. The divide is blocking a deficit-cutting deal
that would pave the way for lawmakers to raise the $14.3
trillion U.S. debt ceiling to prevent a default.
"We're focused on trying to define where we can agree to
get some, as the vice president likes to say, some granularity
as to the actual cuts and reforms we're looking for,"
Representative Eric Cantor, the No. 2 Republican in the House
of Representatives, told reporters.
Cantor and other negotiators hope to pull together a deal
by the end of the month that would give Congress the political
cover to back an increase in the government's borrowing
authority in the face of widespread voter concern about budget
U.S. deficits are at their highest level relative to the
economy since World War II. The deficit for the fiscal year that ends Sept. 30 is expected to hit $1.4 trillion.
The Obama administration has warned that it will run out of
money to pay the nation's bills if Congress doesn't raise the
debt limit by Aug. 2 -- a prospect that could push the country
back into recession and upend financial markets across the
Republicans are pushing for at least $2 trillion in cuts,
measured over 10 years, to go along with a similar increase in
the debt ceiling to ensure Congress doesn't have to revisit the
politically toxic issue before the November 2012 elections.
But the group remains deadlocked over two areas that could
provide the biggest budget savings. Republicans say they won't
back any tax increases, while Democrats say they won't reduce
health benefits for retirees under the Medicare program. The
cost of the program is projected to nearly double over the next
Still, the group has found some common ground. Farm
subsidies and retirement benefits for federal workers could be
cut, and President Barack Obama recently told Republicans he
would support limiting medical malpractice lawsuits -- a
longtime Republican priority. Student loan subsidies could be
scaled back as well.
Though Democrats do not back the deep cuts to annual
spending that Republicans have proposed, they do support a
five-year freeze that could save roughly $500 billion. Both
sides also back cuts to military spending that could save
roughly $180 billion.
And while Democrats won't consider significant changes to
Medicare, the Medicaid program for the poor could see
significant cuts. A Republican proposal that has passed the
House would give states more control over how it is run and
scale back federal payments by roughly one-third, saving $771
billion over the coming 10 years.
Obama has proposed saving $100 billion by streamlining the
formula by which federal payments are handed out to states and
encouraging more efficiency.
Democratic Representative Rob Andrews said additional
savings could come by moving healthy low-income people from
Medicaid to private insurance under the new healthcare law.
Democrats also hope to save money by using the government's
purchasing power to negotiate lower costs for prescription
Additional savings could come by better managing care for
the fraction of Medicaid patients who rack up the highest
costs, and increasing the amount participants pay to discourage
overuse of medical services.
Still, the Biden group could lose the support of many
Democrats if it cuts too much from Medicaid.
"I don't think the majority of Democrats will accept huge
cuts in Medicaid," Democratic Representative Bill Pascrell told
reporters. "If it's part of the mix, we'll see how much a part
of the mix it is."
(Editing by Cynthia Osterman)